GlaxoSmithKline - CR Report 2006 - GSK · Introduction Welcome to GlaxoSmithKline’s Corporate Responsibility Report 2006. This report explains ... • Nutritional drinks – Horlicks,

A human race

Corporate Responsibility Report 2006

Do more, feel better, live longer

Corporate Responsibility Report of 2006

GSK Corporate Responsibility Report 20062

INTRODUCTION

Introduction 3-6

Corporate responsibility at GSK 7-17

Access to medicine 18-25

Research 26-33

Ethical conduct 34-39

Employment practices 40-49

Supply Chain 50-51

Environmental management 52-74

Our work with communities 75-80

Data summary 81



About GSK

We are a research-based pharmaceuticalcompany. Our mission is to improve thequality of human life by enabling people

to do more, feel better and live longer. Our businessemploys over 100,000 people in 116 countries. Ourconsumer healthcare business includes dental healthproducts, over-the-counter medicines andnutritional drinks.

00%

00%

0%

£11.2bn

£7.0bn

£5.0bn

USA £11.2bn

Europe £7.0bn

International £5.0bn

Turnover by location of customer 2006

Key statistics

(£bn, except for employees) 2006 2005 2004

Turnover – total 23.2 21.7 20.0

pharmaceuticals 20.1 18.7 18.1

consumer healthcare 3.1 3.0 2.9

Profit before taxation 7.8 6.7 5.8

Number of employees 102,695 100,728 100,019

IntroductionWelcome to GlaxoSmithKline’s Corporate Responsibility Report 2006. This report explainsour approach to the wide range of social, ethical and environmental issues associated with

our business and our performance in 2006.

About our reportThis report covers our corporate responsibilityactivity and performance during 2006. It updatesour last corporate responsibility report published inMarch 2005.

Data relate to the calendar year 2006, except wherestated.

The environmental data cover the calendar year2006. Data are collected from all of our 80 pharmaceutical and consumer manufacturingsites, 11 of our 13 biologicals manufacturing sitesthat are in operation, 18 of 22 pharmaceutical andconsumer research and development sites and 6 of8 major office locations. We include available datafor sites that were in operation for all or part of theyear. We do not require environmental data fromsmall offices and distribution centres. Notesattached to the charts explain the scope and datacollection process for each parameter in more detail.Unless specified as being per unit of sales, figuresare absolute numbers, i.e. total consumption ofenergy, water etc. Data in the environment, healthand safety sections of this report are externallyverified, see Verification.

The scope of other data relate to our worldwideoperations except where indicated.

We use external guidelines and frameworks toinform our reporting where relevant. We do notbase our report on the Global Reporting Initiativeguidelines but we have produced a GRI index toshow which elements of the guidelines we coverand to aid comparison with other company reports.

More background information on our policies andapproach to CR is available on our website:www.gsk.com/responsibility.

We also publish a Corporate Responsibility Reviewwhich provides an overview of our approach tocorporate responsibility. It is available in print andon our website.

Our 2005 CR report was one of the top 50 reports(ranked 17th) in the 2006 SustainAbility, UnitedNations Environment Programme and Standard &Poor’s Global Reporters Survey – an internationalbenchmark survey of non-financial reporting.

MedicinesOur key pharmaceutical productstarget serious diseases including:

• Asthma and chronicobstructive pulmonary disease

• Epilepsy, depression and otherdiseases of the central nervoussystem

• HIV/AIDS, herpes and otherviral diseases

• Infections

• Diabetes

• Cancer

• Heart disease and othercardiovascular diseases

• Urogenital diseases

VaccinesGSK makes vaccines that protectagainst diseases including:

• Hepatitis A and B

• Diphtheria

• Influenza

• Polio

• Rotavirus

• Tetanus

• Typhoid

• Whooping cough

Consumer healthcare brandsOur brands include:

• Over-the-counter medicines –Beechams, Contac,Nicorette/Niquitin, Panadol,Tums, Zovirax

• Dental health – Aquafresh,Macleans, Polident, Sensodyne

• Nutritional drinks – Horlicks,Lucozade, Ribena

http://www.gsk.com/responsibility/cr-review-2006/pdf-downloads.htm

www.gsk.com/responsibility



We believe that a healthcare company isn’t sustainable if it is only concerned about the 20 percent of the world’s population lucky enough to have the resources to pay for newtreatments. We believe that Access to medicines is essential to our vision for GSK.

Improving people’s health is what drives us and what makes talented scientists want to work here.

Our commitment to the poorest countries is integral to this. These countries may not represent aviable commercial market for some new medicines but there is still a need for people to havemedicines they cannot afford. Yet pure philanthropy is not the right solution either – the needs aretoo great.

We look for new ways to tackle these problems. GSK is involved in over ten public private partnershipprojects – researching new medicines and vaccines for diseases disproportionately affectingdeveloping countries, including HIV/AIDS, malaria and TB. We are also making key medicines andvaccines more accessible through discounted prices and have negotiated eight licences for third-partymanufacturers to produce generic versions of our key HIV medicines.

As this Report shows, our efforts are starting to bear fruit. Preferential pricing and voluntary licencesare helping to increase the supply of HIV/AIDS medicines to sub-Saharan Africa. In 2006, sevencountries completed their five-year programmes to eliminate lymphatic filariasis using ouralbendazole treatment. We will continue donating our tablets until this disabling and incurabledisease is completely wiped out.

Vaccines are another exciting area. In 2006, 75 percent of all the vaccine doses we produced weresold at preferential prices for immunisation campaigns in the developing world. These will savemillions of lives. We expect to launch our vaccine for cervical cancer in 2007. This disease affectswomen in all countries but has the greatest impact in the developing world where there are fewscreening programmes to catch early cases.

There is no room for complacency – much more effort is needed from all stakeholders to resolvethe healthcare problems of developing countries. But we are proud of the contribution we aremaking.

We know that our efforts on access to medicine must be based on a solid foundation. Our industryis high profile and often the subject of criticism. Good medicines can make a big difference to thequality and length of life for all of us and it is rightly expected that we should meet the higheststandards of integrity in all aspects of our work.

This Report gives a snapshot of our approach to embedding an ethical culture across GSK. Thisincludes applying the highest standards of behaviour and transparency in our R&D and promotionof medicines, treating our people well, and minimising the impact of our business on theenvironment. We also need to play our part in tackling major global issues such as climate change.

We value the input of our stakeholders and would welcome your views on this Report or any aspectsof corporate responsibility at GSK.

CEO/Chairman’s letter

Sir Christopher GentChairman

JP GarnierChief Executive Officer



What is your vision for CR at GSK? There are three elements. We want to achieve highstandards of behaviour in everything that we do, inall parts of the company. And we want to be knownfor that. We’ve adopted the theme ‘performancewith integrity’ which has been very successful inengaging our employees. Secondly, we need tobring the outside world into our decision making.Only through a full understanding of stakeholderviews will we make the best decisions. The thirdelement is our desire to be a real member of thelocal community everywhere that we operate. Thatincludes playing our part in the wider globalcommunity by contributing to better healthcare.

Where do you think GSK is doing well?We are very engaged on issues of the developingworld – and in my experience this is quite unusualfor a public company. I believe that we lead ourindustry on R&D for neglected diseases, preferentialpricing and voluntary licensing and are well aheadof most other sectors. We take a long-termapproach and our programmes involve a highdegree of partnership and dialogue with NGOs,governments, and organisations such as the WorldHealth Organisation and the Gates Foundation.

Where should GSK be doing more?Sales and marketing practices are always a hot topicfor the pharmaceutical industry. We need to ensurethat we keep up with public and regulatoryexpectations of how we market our products, andensure GSK policies meet or exceed these changingexpectations. However, being the first to changecommercial practices runs the risk of reducing ourcompetitiveness, so we must also be proactive inencouraging others in our industry to follow suit.

What is the biggest challenge?The most difficult task is finding a balance betweenthe needs of different stakeholders. Our investorsare concerned primarily with profit. CR is importantto them because it affects the long-term success ofthe company but the next quarter’s earnings areoften a more pressing priority. On the other hand,NGOs and others in society would like us to be moreconcerned with solving society’s healthcareproblems.

Are GSK’s programmes for the developingworld philanthropy or are they part ofyour business? There’s no doubt that they are part of the business.The need for our medicines will not go away so weneed to make sure that our programmes aresustainable, and the best way to do this is makesure they are part of our day-to-day business. Agreat example of this is our long-term commitmentto providing not-for-profit HIV medicines in theworld’s poorest countries. There is also suchimmense stakeholder pressure on this subject thatit would be impossible to turn a blind eye. But it’snot just about responding to pressure from theoutside. Our 100,000 employees want to work fora company that is addressing these challenges. Wehave a duty to use our scientific know-how andhuman capital to make a difference where we can– it’s essential to our own sense of integrity.

Why haven’t you reduced the price ofyour products in all markets?To be a sustainable business we have to make anadequate return or we won’t be able to discovernew medicines. We’re under immense pressurefrom competitors and investors. Nevertheless weare looking at the issue of pricing beyond the world’spoorest countries.

Are you researching new medicines thatare really needed or just looking for ‘me-too’ drugs?In many cases the drugs that are really needed willbe the most profitable because that’s where thedemand is. New drugs for cancer or Alzheimer’s willbe meeting a huge unmet medical need and will beprofitable too. The problem is that these diseasestend to present extreme scientific challenges andrequire novel scientific approaches which carry agreater risk of failure. Diseases of the developingworld present a different problem – there is greatneed but no viable commercial market for newproducts. We get round this problem by workingthrough public private partnerships and are veryactive on R&D for neglected tropical diseases. I thinkthe debate about me-too drugs has been taken toofar. If a new drug enables patients to take fewerdoses each day or reduces side effects then it mayseem like only a small improvement but it can makea very big difference to the treatment outcome.

Q&A Duncan Learmouth was appointed Senior Vice President, Corporate Communications and

Community Partnerships in 2006. Here he sets out his vision for CR at GSK. The complete Q&A is available in our full CR Report at www.gsk.com/responsibility.



The pharmaceutical industry has beencriticised for lack of transparency overclinical trial results. Are you doinganything to address this concern?There is a perception that the pharmaceuticalindustry is less than transparent and I think this ispartly because we haven’t done a very good job ofcommunicating the challenges we face. I believethat our online Clinical Trial Register has gone someway to addressing these concerns. But thecommunication of data from clinical trials is a tough area. Weighing up the balance of risksand benefits from a medicine is rarelystraightforward. Data isn’t black and white – itrequires interpretation and judgement. Thisinevitably means that people will have differentviews and that our knowledge will change over timeas new drugs are tested and used. So actuallytalking about medicines to doctors is notstraightforward. This communication is veryimportant but very challenging.

Is the pharmaceutical industrysustainable?We have a ‘contract with society’ – in return forinvesting in new drugs we generally have aroundten years of intellectual property protection on ourproducts before generics can be made. R&D isuncertain and unpredictable so in some periods weare more successful at this than in others. But Ibelieve that the basic model is still a good onebecause it fosters a high level of innovation. Ofcourse there are challenges and the industry mustcontinually look for ways to improve R&Dproductivity. We have a unique type of product thatplays a very personal role in people’s lives. Nowadaysgood health is seen as a right but it’s also a businessand for some people this is uncomfortable.Generally, though, I believe people accept the needfor a trade-off – they may not like us making a profitfrom health but they accept it because it’s the bestway to encourage the discovery of new medicines.

What role is GSK playing in addressingclimate change?We have targets for reducing energy usage. Ibelieve we’ve adopted a sustainable approach thatis linked to our business. Because of our positionas a company that addresses healthcare needs,and the relatively small footprint we havecompared to other sectors, there are other issuesthat are a higher priority to address. Neverthelessclimate change is an important issue for GSK andfor our stakeholders and we need to play our partin tackling it.



Why is CR important to GSK?

Corporate responsibility is about how weachieve our goals and implement ourbusiness strategy. We aim to operate in a way

that reflects our values, while understanding andresponding to stakeholder views and connectingbusiness decisions to ethical, social andenvironmental concerns.

Corporate responsibility helps to achieve ourbusiness goals by:

• Supporting our relationships with keystakeholders including patients and consumers,doctors and governments

• Protecting and enhancing our reputation andtherefore trust in our products

• Improving our ability to attract, retain andmotivate the best people

• Strengthening our risk management processes

We believe that our business makes a valuablecontribution to society by developing and marketingmedicines which improve people’s lives. Howeverwe know that the research, development,manufacture and sale of medicines raise ethicalissues. We seek to minimise the negative impacts ofour business and maximise the positive benefits ofour products and operations.

Corporate responsibility at GSK

Our strategyGSK is committed to addressing two key challengesfacing the pharmaceutical industry and society as awhole. These are:

• Improving productivity in research anddevelopment

• Doing our part to support patient access to newmedicines

To do this we focus on four business strategies. Wehave structured this report around these strategiesto show how corporate responsibility is integratedinto our business.

Build the best product pipeline in the industry forthe benefit of patients, consumers and society

Relevant responsibility issues include:

• Animal research

• Conduct of clinical trials

• Patient safety

• Interactions with patient groups

Improve access to medicines in the developedand developing world


• R&D for diseases of the developing world

• Preferential pricing

• Voluntary licensing

• Access to medicines in middle income and developedcountries

• Community investment

Maximise the potential of our current productportfolio


• Ethical conduct

• Standards in our supply chain

• Environmental impact

Be the best place for the best people to do theirbest work


• Employment practices

• Diversity

• Human rights of employees and in our supply chain

• Health and safety

• Resilience and well being



Our most important corporate responsibilityissues Corporate responsibility is a broad subject whichcovers a very wide range of issues. We need toprioritise these issues in order to manage themeffectively and report clearly on our performance.

We identify the most important (material) issues forGSK through engagement with stakeholders, ourrisk management processes and our knowledge ofour business and the pharmaceutical industry.

These inputs have led us to identify four CR issuesthat are particularly relevant and significant for GSK.These are:

• Research and innovation – contributing tohealthcare by developing medicines andvaccines that meet the needs of patients

• Access to medicines in developed anddeveloping countries

• Ethical conduct including sales and marketingpractices

• Environment, including climate change and theimpact of pharmaceuticals in the environment

MANAGING CROur Corporate Responsibility Statement andPrinciples define our approach to our key CR issuesand provide guidance for employees on thestandards to which the company is committed. Youcan view the Principles in the background sectionof our website.

CR governanceWe have a Corporate Responsibility Committee(CRC) of non-executive board directors that provideshigh-level guidance on our approach to CR. TheCEO and members of the corporate executive teamare actively involved in CR and participate in CRCmeetings.

The committee members are Sir Christopher Gent(Chair), Sir Ian Prosser, Dr Daniel Podolsky and Tomde Swaan. You can find more information on theCRC members and Terms of Reference in thebackground section of our website.

The Committee meets four times a year to reviewour policies and progress on our CR Principles. FourPrinciples – access to medicines, standards of ethicalconduct, research and innovation and globalcommunity partnerships – are reviewed annually.Other Principles are discussed at least once everytwo years. The Committee’s findings are reported tothe Board.

During 2006 the Committee reviewed our activityin a number of areas including:

• Access to medicines

• Community investment

• Reputation management

• Caring for the environment

• Standards of ethical conduct

• DTC advertising

• Consistency of commercial practices codes

The Committee also reviews and signs off ourannual CR report.

CR risksManagement of significant business risks iscoordinated by the Risk Oversight and ComplianceCouncil (ROCC). The ROCC also considersreputational and corporate responsibility risks.

For more background information on the ROCC,see Risk management and compliance ongsk.com.

Management structureDuncan Learmouth, Senior Vice President CorporateCommunications and Community Partnerships, andRupert Bondy, General Counsel, are our executiveteam members with responsibility for CR.

We believe that day-to-day management of CRissues is done most effectively within our businessoperations, where experts on all our CR issues work.Coordination is provided by a cross-functional team,made up of representatives from key business areas.These representatives are senior managers and havedirect access to the appropriate executive teammember. Their role is to oversee development,implementation and communication of CR policyacross GSK. This ensures a comprehensive andconsistent approach is taken throughout theorganisation.

We also have a small CR team that co-ordinatespolicy development, reporting and communicationwith socially responsible investment analysts.

For details of our environment health and safetymanagement see EHS management.

AssuranceThe environment, health and safety sections of thisreport are externally verified by environmentalassurance consultancy, SGS. The purpose of theirassessment is to:

• check that the EHS data presented are accurateand that they represent GSK’s performancefairly

• critically review the completeness and relevanceof the information presented

• assess the effectiveness of GSK’s datamanagement and reporting systems

You can find SGS’s verification statement and ourresponse on page 70.

Other sections of the report are not externallyverified. However GSK has an extensive internalaudit programme that covers all aspects of ourbusiness.

Internal communication and awarenessWe keep employees informed about corporateresponsibility. During 2006, 34,000 copies of ourCR Overview brochure were distributed toemployees directly and through Spirit, our internalmagazine. Spirit also features regular articles on CR related topics.

http://www.gsk.com/responsibility/cr_report_2005/managing-cr/principles.htm

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We also surveyed a random selection of 1000 employees on their awareness of corporateresponsibility and which issues they consider themost important. 369 employees from across theworld and in all the different areas of the businessresponded to the survey.

• 80 percent have heard of corporateresponsibility

• 78 percent recognised it was the responsibilityof themselves and other employees

• Ethical business conduct, access to medicinesand health and safety were the three areasidentified as most important

• These are also the areas that employees believethat the company is doing most to address

STAKEHOLDER ENGAGEMENTStakeholder engagement is an importantcomponent of our approach to managing ourbusiness responsibly. It helps us to identify theimportant CR issues for our business, understandstakeholder views and expectations and to buildtrust with key audiences. We also engage with ourstakeholders to tell them about our work and tolearn from their expertise. GSK interacts with a widerange of stakeholders including:

• Patients

• Doctors

• Governments and regulators

• Public and private health providers

• NGOs

• Multilateral organisations

• Employees

• Investors

• Local communities

• Suppliers

• The scientific community

• Peer companies

Most of this discussion takes place in the normalcourse of business. For example our scientists meetregularly with academics, researchers and otherpharmaceutical companies.

It is difficult to quantify the extent of ourengagements, since this activity is embedded in ourbusiness operations, but we have included examplesin this section and throughout this report. These aresome of the ways we engaged with ourstakeholders in 2006.

Investors and benchmarking organisationsWe held 18 meetings with investors in 2006, todiscuss CR issues.

These included one-to-one meetings to discuss keyissues as well as educational visits and meetings. InJanuary we hosted a meeting for 17 investors at ourvaccines facility in Belgium. Investors were shown apresentation on the science of vaccines and visitedthe site’s research and production areas. In October,eight investors visited our manufacturing plant inDartford, England. Investors were shown theprocess for making the active ingredients in ourproducts and the environmental managementfacilities at the plant. On both occasions investorshad the opportunity to meet and question seniorGSK staff.

In December, GSK and Dresdner Bank ran aneducational seminar on patient safety for 16 investors. Our senior physician in charge ofglobal patient safety explained our current drugsafety monitoring procedures and how GSK plansto further develop these, and answered questionsfrom investors.

Investors raise questions and issues throughout theyear. In 2006, the main issues raised related to salesand marketing practices, climate change, access tomedicines and clinical trials ethics, particularly in thedeveloping world. Our approach to all these issuescan be found in this report.



GSK received the following ratings from agencies:

GSK reported its greenhouse gas emissions throughthe Carbon Disclosure Project (CDP). You can readour response on the CDP website atwww.cdproject.net.

CR benchmark studies We co-sponsored a benchmarking study by theconsultancy and think-tank SustainAbility into non-financial reporting in the pharmaceutical industry.GSK was rated highest overall compared to 12 othercompanies in the sector.

We were also ranked 17th out of the top 50 companies in the SustainAbility/UNEP GlobalReporters study of best practice in sustainabilityreporting. GSK was one of only two pharmaceuticalcompanies in the top 50.

We retained our position in the Premier League(companies scoring above 95 percent) of Businessin the Community’s Environment index.

EHSWe have established a stakeholder panel to informour approach to EHS management. This is made upof ten external stakeholders representing customers,suppliers, regulators, public interest groups andinvestors, as well as four senior GSK EHSrepresentatives.

Opinion leadersOpinion leaders are influential individuals ororganisations with expertise in corporateresponsibility. These include NGOs, governmentrepresentatives, investors, journalists, academics andconsumer and industry organisations.

We held two discussions, one each in the US andUK, to gather feedback from 18 opinion leaders onour CR performance and reporting.

PerformanceParticipants mostly agreed that GSK’s approach tocorporate responsibility is comprehensive, well

thought-out and well managed. We were ratedmost highly for our programmes to increase accessto medicines in the developing world.

Opinion leaders made suggestions for how weshould improve in a number of areas. Theseincluded:

• GSK should demonstrate its commitment toimproving health globally beyond sellingpharmaceuticals (e.g. through diseaseprevention)

• We should do more to embed CR throughoutthe company and should set targets to improveour performance

• GSK should spend more time listening tostakeholders

• We should develop a strategy for reducing ourimpact on climate change

• We should focus on improving access tomedicines in middle-income countries

Reporting The opinion leaders felt GSK’s CR report coveredthe right issues, but the report was too long overall,reducing readability. GSK scored points forimproving the transparency of its reporting over thelast three years. But stakeholders expected furtherdisclosure on GSK’s work with patient advocacygroups, ethics, management of the supply chainand our approach to human rights issues.

Other stakeholdersThe following table summarises our interaction withother groups and shows where further informationcan be found.

Organisation Rating

Association of British Insurers GSK was given a ‘full’ rating for its disclosure of Boardresponsibilities and policies relating to social, ethical andenvironmental issues.This is the highest possible rating.

Dow Jones Sustainability Index GSK was included in this year’s index. Individual companyscores and rankings are no longer published.

FTSE4Good Index GSK was included in the FTSE4Good Index.

Innovest Strategic Value Advisors We were rated 3rd out of 44 companies in Innovest’sGlobal Pharmaceutical Sector Report. GSK was ratedparticularly highly in the area of strategic governance.

Claremont McKenna GSK received a B+ in a rating of pharmaceuticalsustainability reporting, carried out by Claremont-McKenna, a US college that evaluates companies oncorporate responsibility issues. GSK was 7th out of the 25 companies evaluated

http://www.cdproject.net/

http://www.bitc.org.uk/take_action/in_the_environment/getting_involved/the_environment_index/index_results.html



Stakeholder Engagement

NGOs We engage with international and community NGOs through our access, education and public health programmes. Read more in Investment in Public Health Initiativeson page 76 and Community Investment on page 75.

We also engage regularly with animal welfare organisations.Read more in Animal Research on page 26.

Employees We seek feedback from our employees through regular employee surveys.See Employment on page 40 for a summary of the results from our latest survey.We also consult employees on changes that affect them and discuss businessdevelopments through our Works Councils and European Employee Forum. For moreinformation see Internal Communications on page 44.

Governments and We engage in debate on legislation and seek to influence policy decisions that affect GSK.regulators We also engage with governments to advance our corporate responsibility objectives.

See Government and External Affairs on page 12

Multi-lateral agencies We engage with multi-lateral agencies through our access and public health initiatives.See Access to Medicines on page 18.

Doctors We engage with doctors in many ways including through our medical representatives and when running clinical trials. See Research and Ethical Conduct for information on howwe manage the issues this engagement raises.

Patients GSK researchers and scientists meet with patients as part of our Focus on the Patient initiative. This engagement influences our understanding of diseases and ourresearch priorities.

We also engage with patient groups directly and through Patient Advocacy Leaders’Summits. Read more in Patient Advocacy.

We also conduct market research via third parties to understand patient needs.

Local communities Our interactions with local communities are managed by individual GSK sites.See Working with Communities for examples of our initiatives.

Suppliers We hold global and regional supplier review meetings where senior GSK managers address and interact with suppliers on key issues. For more information see Supply Chainon page 50.

The scientific It is important for GSK to be part of scientific and academic debates.This report containscommunity and examples of some of these interactions. For a discussion of how we manage such academic partnerships relationships see Research.



GOVERNMENT ANDEXTERNAL AFFAIRS

The pharmaceutical industry is highly regulated andthese regulations can have a significant impact onour business. So it is essential that we engage indebate on legislation and seek to influence policydecisions that affect GSK. In fact, as a majormultinational corporation we are often approachedby governments to give our views, along with otherstakeholders such as NGOs.

Our size and global reach give us access togovernments and policy makers. We need to usethis access responsibly to benefit patients and ourbusiness. We believe that by being transparentabout our lobbying and public policy work we canincrease stakeholder trust and confidence in GSK.

We have policies governing our interactions withimportant stakeholders. This section covers ourinteraction with governments and other externalgroups, including patient advocacy groups.Information on our approach to working withdoctors and healthcare professionals is available inthe Research section of this report.

More background information on our approach topublic policy is available in the external affairssection of gsk.com.

Our approach to external affairs GSK’s external affairs teams monitor changes andproposed reforms to legislation and meet regularlywith government officials to explain our views on arange of public policy issues. Lobbying on issuesaffecting the whole pharmaceutical industry issometimes conducted through trade associations.We may also hire professional lobbyists to supportour public policy work.

Our public policy work is governed by our ExternalAffairs Code of Conduct, and is backed up byfactual research and analysis. See policy onbackground site.

GSK believes that, where legally and culturallyappropriate, political donations are a legitimate wayof supporting the political process. Information ondonations is given both in this report and in theAnnual Report and Accounts. We have a PoliticalDonations Policy governing our contributions topolitical candidates.

Public policy activity in 2006In 2006 we engaged with governments on a widerange of issues that affect our industry. In particularwe advocated for policies that will deliver:

• Strong intellectual property rights and dataexclusivity protection to encourage the researchand development of new medicines andvaccines

• Pricing and reimbursement systems thatsupport innovative medicines and providegreater predictability and transparency. Webelieve there should be greater liberalisation inpharmaceutical pricing, especially for medicinesthat are not paid for by governments

• A common European regulatory system thatoffers rapid approval of new products

• Intellectual property incentives to promoteresearch on orphan medicines, paediatricmedicines and medicines for the developingworld

• Implementation of clinical trial regulations thatpromote safety and good clinical practice

• Appropriate use of health technologyassessments (HTAs). We believe HTAs should beindependent, transparent and scientificallyrobust – they should be a means of ensuringthe right medicines reach the right people,rather than be used as a rationing tool

• Increased individual involvement andresponsibility for personal healthcare, includingimproved access to information aboutmedicines from pharmaceutical companies

• An environment which promotes research anddevelopment, and encourages informed debateon the benefits and challenges of new researchtechnologies

Advocacy on CR issues in 2006We engage with governments and otherstakeholders to advance our corporate responsibilityobjectives. For example, in 2006 GSK:

• Advocated for improvements to healthcare inthe developing world through discussions withthe UK and US governments, multilateralagencies and NGOs, see Access to medicines

• Participated in the World AIDS conference heldin Toronto, Canada. See Access to medicines

• Supported Mobilising for Malaria, an advocacyinitiative to generate political commitment andsustained funding to combat malaria, seeCommunity Investment

• Worked with regulators to encourageacceptance of alternatives to animal testing, seeAnimal research

• Participated in developing the World HealthOrganization’s International Clinical TrialsRegistry Platform, an initiative to standardisethe way information on medical studies ismade available to the public

• Encouraged more consistent approaches topatient safety and the reporting of side effects,see Patient Safety

• Led efforts to develop industry codes of conductfor marketing ethics in several Asian countries.See Marketing Codes of Practice

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Our position on key issuesWe publish our position on many key issues in thebackground section of our website. We are happyto discuss our position on these or any other issueswith legitimate parties. Contact our corporateresponsibility team at [email protected]

The current position statements published onwww.gsk.com/responsibility include:

• Clinical trials in developing countries

• Counterfeit medicines

• Developing world challenges and access tomedicines

• Importation of medicines

• Intellectual property and the TRIPS agreement

• Product diversion

• Preparations for a flu pandemic

Membership of trade associationsGSK is a member of trade organisations including:

• Association of the British PharmaceuticalIndustry (ABPI)

• Biotechnology Industry Organization (BIO)

• European Federation of PharmaceuticalIndustries (EFPIA)

• Intellectual Property Owners Association (IPO)

• Japan Pharmaceutical ManufacturersAssociation (JPMA)

• The Swedish Association of the PharmaceuticalIndustry (LIF)

• Organization For International Investment (OFII)

• Pharmaceutical Research and Manufacturers ofAmerica (PhRMA)

• International Federation of PharmaceuticalManufacturers and Associations (IFPMA)

US lobbying expendituresGSK spent $5.14m on federal lobbying activities inthe US during 2006. This information is reported tothe US Congress in accordance with the LobbyingDisclosure Act of 1995. It includes the costs ofsalaries and benefits for all employees registered tolobby the US government; hiring outside lobbyingconsultants; support for lobbying contacts such asplanning activities, research and other background;running the GSK Washington DC governmentaffairs office; support staff; and the portion of tradeassociation fees associated with federal lobbying.

In other countries we do not collect separate dataon lobbying expenditure.

Political donationsGSK makes political donations with corporate fundswhere these are authorised by law and are culturallyappropriate.

In 2006 we contributed £319,000 to politicalorganisations in the US, Canada and Australia. Alldonations are covered by the GSK policy onpolitical donations.

GSK does not make donations to political parties orother political organisations in the European Union.See our Annual Report for more information.

Contributions in the United StatesIn the US, candidates are financed primarily bycontributions from companies, individuals, NGOsand other parties. Corporate contributions are anaccepted and important way for companies toengage in the political debate.

Corporate contributions to national political partiesand candidates running for federal office areprohibited by US law.

Contributions to state candidatesGSK corporate funds are only given to candidatesat state level, in states where this is permitted bylaw. In 2006, we donated $536,000 (approximately£290,000) to candidates for state-held offices. Thiswas split between Republicans (approx 55 percent)and Democrats (approx 45 percent).

Our contributions are not made on the basis ofpolitical party. GSK supports candidates who seekan environment that appropriately rewards high-risk, high-investment industries and believes in freemarket principles and intellectual property rights.All states publish information about politicaldonations.

Political Action Committee contributionsIn accordance with the Federal Election CampaignAct, there is a GSK Political Action Committee (PAC)that facilitates voluntary political contributions byeligible employees. The PAC is not controlled by GSKbut by our participating employees, who have thelegal right to make contributions to candidates andpolitical parties at the federal and state levels. AllPAC contributions are voluntary and donations aresubject to strict limitations. For example, the GSKPAC may not contribute in excess of $5,000 to acandidate for federal office per election.

PAC contributions are determined by a governingboard of PAC-participating GSK employees fromacross the company. As required by law, PACcontributions are reported to the Federal ElectionsCommission (FEC). In 2006, the second half of thetwo-year federal election cycle, the GSK employees’PAC contributed $1.36m to candidates for state andfederal offices.

Contributions in CanadaIn 2006, GSK donated $CAD 56,000 (approximately£27,000) in Canada to political candidates in thoseprovinces where it is legal.

Contributions in other countriesIn 2006, GSK donated $AUS6,000 (approx £2,000)in Australia.

Patient advocacyPatient advocacy groups provide their memberswith support and information on how to live withtheir condition, represent patient views andadvocate on issues affecting patients’ interests. Theyare an important stakeholder for GSK and weengage with them as part of our aim to be a patient-focused company.

http://www.gsk.com/responsibility/values-policies.htm

http://www.gsk.com/responsibility/values-policies.htm


http://www.gsk.com/reportsandpublications.htm



Across the world we work with a wide range ofpatient groups in a variety of different disease areassuch as cancer, asthma, diabetes and HIV/AIDS. Ourinterest in patient advocacy is about understandingpatient needs and their illness. Our aim is to supportthe voice of patients and thus encourage aconstructive healthcare debate for all stakeholders.

We believe that patient groups are playing anincreasingly valuable role in improving healthcare. Toprotect their independence and credibility patientgroups should be encouraged to obtain support,financial and non-financial, from diverse multiplesources – private, public and through individualdonations.

Our approachWe are committed to ensuring that we work withpatient groups at the highest levels of ethicalstandards and transparency, and have establishedstrong global principles.

As part of GSK’s commitment to working ethicallywith patient groups, all employees involved receiveformal training on our global principles and workwithin a framework set by our Standard OperatingProcedures. In addition employees have access to apatient advocacy resource intranet site.

In the UK GSK’s advocacy work is governed by theAssociation of the British Pharmaceutical Industry(ABPI) Code of Practice. This states that there mustbe a written agreement between the company andthe patient group, and that companies must publisha list of all patient groups that they fund.

We list all UK patient groups receiving funding fromGSK. In 2007 we have gone further towards greatertransparency and extended the list to include allpatient groups in Europe that receive fundingfrom GSK and have given full details of that funding.

In Europe GSK developed a Standard OperatingProcedure (SOP) for working with patient groups.This initiative is being extended to the other GSKregions in 2007. The SOP covers a variety of areasconcerning GSK’s work with patient groups. It statesthat GSK will not seek a patient group’sendorsement of any medicine, and that we will notprovide more than 50 percent of a patient group’soverall funding. In 2007 this will become no morethan 25 percent funding. In the vast majority ofinstances the actual percentage is much lower.Additionally all activities are accompanied by awritten agreement.

GSK is working with many pharmaceutical companyrepresentative bodies to encourage industry-widetransparent and ethical approaches to working withpatient groups.

Work with patient groups in 2006Patient Advocacy Leaders’ Summits (PALS) are oneof the ways we engage with patient groups. In 2006we held summits in the US, Japan and in manyEuropean countries including Poland, Netherlands,Romania and Latvia. These meetings give patientgroups the opportunity to learn about GSK, tell thecompany how it can better support their work, anddiscuss and debate key issues relating to patientadvocacy and healthcare policy. There is typically arange of workshops for attendees, includingsessions on media training and sharing best practice.

We have a European patient group advisory boardthat we consult on GSK policies and thus work withto make the company as patient-centric as possible.The board has an independent chair, and is made upof representatives from a series of European groups,many from disease areas where GSK has no directtherapeutic interest.

CONTRIBUTION TO SOCIETYWe believe that our business adds social andeconomic values to society through the contributionour products make to healthcare and through thejobs and wealth we generate.

Contribution to healthcareOur medicines and vaccines enable people to livelonger and enjoy a better quality of life.

Healthcare is expensive – especially when patientsneed to make frequent visits to the doctor or spendtime in hospital. For example in the US, $3 of every$4 spent on healthcare goes to treating people withchronic diseases. Healthcare costs are also likely torise further in many countries as the populationages. Vaccines and medicines reduce the burden onhealthcare systems by preventing diseases, enablingpeople with chronic diseases to work and helpingpatients to control their symptoms and make fewervisits to hospital.

GSK contributes to healthcare in three ways:

• Disease prevention

• Effective intervention – medicines to treatdiseases

• Innovation – investment in R&D to discover newmedicines and vaccines to meet futurehealthcare needs

Our principles for working withpatient groups• The independence of

patient associations, oftheir political judgementand of their activities shallbe assured.

• In all co-operative matters,transparency is vital.

• Any joint policiesundertaken betweenpatients associations andGlaxoSmithKline shall bebased on mutual respectand trust.

• GlaxoSmithKline shallrefrain from using undueinfluence to promote itsspecific medicines orservices.

• When working with patient associationsGlaxoSmithKline willalways comply with locallaws/governance.

http://www.abpi.org.uk/links/assoc/PMCPA/pmpca_code2006.pdf

http://www.gsk.com/responsibility/cr_issues/patient-organisations.htm



Disease preventionPreventing disease is better for the potential patient,who avoids illness, pain and suffering; and betterfor society because it reduces healthcare costs. Wesupport disease prevention efforts in several ways:

VaccinesWe make vaccines that protect against crippling andfatal diseases including hepatitis A and B, diphtheria,seasonal flu, polio, tetanus and whooping cough.We currently supply 22 vaccines against 17 diseases.

Global immunisation efforts have led to theeradication of smallpox, the potential eradication ofpolio, and are estimated to save the lives of up tothree million people world-wide each year.Vaccination has a longer term benefit and is morecost effective than treating people after theybecome sick. It can also reduce healthcare costs by:

• preventing disease outbreaks

• reducing the need for expensive treatments andhospitalisations

• reducing permanent disabilities and the long-term effects of disease

• preventing loss of productivity from illness

GSK VaccinesWe distributed 1.1 billion vaccine doses in 2006 to169 countries in both the developed and thedeveloping world – an average of 3 million doses aday. We invested £348 million in vaccine research in2006 and had 1,500 scientists working at ourvaccine research centres.

We make our vaccines available in developingcountries through an innovative tiered pricingmodel. In 2006, 75 percent of the 1.1 billionvaccines we produced went to the developingworld. We are currently researching new vaccinesfor more than 15 diseases including several that areparticularly relevant for developing countries. SeeAccess to medicines page 18.

Patient education – We support patient educationand disease prevention initiatives. These includeworking with patient advocacy groups,producing patient information leaflets for medicinepacks and doctors’ surgeries and publishinginformation on disease prevention on our website.

Anti-smoking – It is estimated that around fivemillion people die prematurely each year as a resultof smoking. This makes smoking cessation one ofthe most effective ways to improve health. GSK’snicotine replacement therapy brands such asNicoDerm and Nicorette have helped more than five million smokers quit since 1996, making asignificant contribution to public health.

Community investment – We support several majordisease prevention programmes in developingcountries through our community investment.These include:

• the Global Alliance that plans to completelyeliminate LF (a disfiguring disease that is one ofthe world’s leading causes of permanentdisability) by 2020. See Community Investment,page 75.

• PHASE, our programme to reduce diarrhoea-related disease by encouraging school childrenin developing countries to wash their hands.See Community Investment, page 75.

InterventionOur key pharmaceutical products target seriousdiseases including:

• Asthma and chronic obstructive pulmonarydisease

• Epilepsy, depression and other diseases of thecentral nervous system

• HIV/AIDS, herpes and other viral diseases

• Infections

• Diabetes

• Cancer

• Heart disease and other cardiovascular diseases

• Urogenital diseases

These make a major contribution to healthcare inseveral ways:

• Prolonging life – GSK is a pioneer in treatmentsfor HIV/AIDS. Our antiretrovirals (ARVs) such asCombivir help patients to control the effects ofHIV infection for many years. We sell our ARVsto countries in sub-Saharan Africa at not-for-profit prices. See Access to Medicines.

• Preventing complications – Many diseases suchas diabetes are progressive – if patients don’treceive the right treatment they can suffersevere side effects. Every day in the US diabetesis the cause of an estimated 225 amputations,around 50 cases of blindness, and 117 peopleexperiencing kidney failure. Avandia, ourdiabetes treatment, helps patients to controltheir symptoms, delays the progression of thedisease and prevents complications. Avandiahas now been used by more than seven millionpeople worldwide.

• Improving quality of life – Many of ourmedicines such as those for asthma anddiabetes help patients with chronic diseases livefull and productive lives. GSK preventativetreatments for asthma such as Seretide/Advaircontrol the symptoms of asthma and preventasthma attacks.

• Curing infection – We produce antibiotics thattreat respiratory tract and other infections. In2006, we donated antibiotics to help reliefefforts in disaster areas. See community onpage 75.

http://www.gsk.com/responsibility/cr_issues/patient-organisations.htm

http://www.gsk.com/yourhealth/index.htm



InnovationDespite revolutionary advances in healthcare thereare still many diseases for which there is no cure orfor which treatments could be improved. Socontinued research and innovation is essential.

We believe that R&D into new medicines is the mostimportant element of corporate responsibility forour company. GSK invested £3.46 billion andemployed over 15,000 people in R&D in 2006.

Our pipeline We have 159 prescription medicines and vaccinesin clinical development. Current projects includeresearch into asthma, cancer, depression, diabetes,epilepsy, heart disease, HIV/AIDS, influenza, irritablebowel syndrome, osteoporosis, schizophrenia,stroke and TB.

We expect to launch five major new vaccines withinthe next five years:

• a human papilloma virus vaccine preventingcervical cancer

• the USA launch of a vaccine against rotavirusinduced gastroenteritis and the strengtheningof rotavirus vaccine uptake in Europe and in theinternational markets

• a vaccine against pneumococcal disease andnon-typeable Haemophilus influenzaeinfections causing otitis media

• a number of vaccines against both seasonal andavian flu based on GSK’s unique expertise inadjuvant technology including, a newgeneration adjuvanted seasonal flu vaccine forelderly people

• vaccine combinations against meningitis

Experts are predicting there may be a major flupandemic in the next decade caused by the H5N1strain of bird flu. GSK is actively preparing for thispotential crisis. In a pivotal clinical trial of GSK’s newgeneration H5N1 influenza vaccine carried out in2006 in Belgium, it was shown that very low dosesof antigen (3.8µg) combined with GSK’s noveladjuvant system elicited a strong seroprotectiveresponse. As GSK’s vaccine is also believed to havethe potential to offer a protection against ‘drifted’variants of the H5N1 virus, it could be used as partof a proactive pre-pandemic vaccination campaign.In addition we also increased production of Relenza,our treatment for influenza. For a full review of ourpipeline please see our Annual Report.

We have an extensive R&D programme into diseasesdisproportionately affecting developing countries.We believe GSK is the only company researchingboth new vaccines and treatments for HIV/AIDS, TBand malaria – the World Health Organization’s threepriority diseases.

Research into the causes of diseaseAs well as researching potential new medicines wealso invest in research to increase understanding ofthe human body and the causes of disease.

For example, in 2006 we launched ECLIPSE, a non-drug study to improve understanding of chronicobstructive pulmonary disease (COPD). The World

Health Organization has predicted that COPD willbe the third leading cause of death by 2020. TheGSK study will involve more than 2,000 patientsover three years and identify relevant markers thatmay help predict disease progression.

Many diseases are caused by genetic factors whichmakes them difficult to cure or prevent. Ourresearch into the body’s immune system will alsoenable us to develop safer, more effective and moretargeted vaccines to protect against a greaternumber of diseases.

Economic value We contribute to the countries in which we operatethrough creating wealth and employment, payingtaxes and purchasing products and services. As wellas these direct financial contributions our productsalso contribute indirectly to economic growth bypreventing and treating disease.

Detailed financial information is available in ourAnnual Report. However, some of the key figuresfor our global business are:

HUMAN RIGHTSHuman rights is a broad subject that is relevant toGSK in a number of different contexts.

We are committed to upholding human rights inour sphere of influence. We have greater controlover human rights in our own operations but canalso influence human rights among our suppliersand wider society.

GSK’s sphere of influenceThere are several reasons why we take human rightsseriously:

• Achieving high standards on human rightssupports our reputation and our goal ofoperational excellence

• It helps us to get the best from our employees

• By working with suppliers that match ourstandards, we help ensure the smoothoperation of supplier contracts and therefore areliable supply of high quality products

• It supports good relationships with thecommunities near our sites

Global figures (£m) 2004 2005 2006

Sales 19,986 21,660 23,225

R&D investment 2,904 3,136 3,457

Payments to:

• Employees 5,054 5,254 5,495

• Suppliers n/a n/a 8,107

• Government (taxation) 1,757 1,916 2,301

• Community investment 328 380 302

n\a = not available

Value to UK economy In 2006, the British PharmaGroup (comprising the two UK-based companies, GSK andAstraZeneca) commissioned areport by the Office of HealthEconomics (OHE), an indepen-dent research organisation, intothe companies’ value to the UKeconomy.

The report used the concept of‘economic rent’ – the netadditional income and wealthbrought to the UK by acompany, in excess of the incomethat would be generated if thelabour and capital were put tothe next best alternative use.

The OHE stated that theestimated net economic rentearned by many enterprises inany economy can be expected to be close to zero i.e. they yieldas much economic value as, butnot significantly more than, thenext best alternative uses of thecapital and labour they employ.

GSK’s and AstraZeneca’seconomic rent from manufact-uring, R&D and other activities inthe UK was estimated to be atleast £1 billion annually, and possibly much higher. GSK contributes approximately60 percent of this figure.

You can read a copy of thereport in the background sectionof our website.

Other studies have also rankedGSK’s value to the UK economyhighly:

The UK Government Departmentof Trade and Industry (DTI) 2006Value Added Scoreboard lists thecompanies making the largestcontributions to value added inthe UK and in Europe. GSK wasranked 6th in the UK and 19th inEurope (the highest pharma-ceutical company). Our valueadded was calculated as £11.8 billion or £118,500 peremployee.

Investment in R&D stimulateseconomic growth. GSK is ranked10th in the UK DTI’s R&DScoreboard which ranks the topglobal companies by the value oftheir R&D investment. We arethe highest ranked UK company.See www.dti.gov.uk/innovation

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Our approach to human rights is guided by the UNUniversal Declaration of Human Rights, the OECDGuidelines for Multinational Enterprises and the corelabour standards set out by the International LabourOrganisation.

Our employeesMost of our direct employees are well educated andskilled people so the risk of human rights issuesoccurring is relatively low. We believe that ouremployment standards on issues such as diversity,equal opportunities and health and safety provideadequate safeguards on human rights for ouremployees. For more information see EmploymentPractices on page 40.

SuppliersWe expect our suppliers, contractors and businesspartners to meet the same standards on humanrights as GSK but we recognise that some suppliersmay not. We seek to influence our suppliers toadopt high standards on human rights by addinghuman rights clauses to our contracts andauditing suppliers. For more information see SupplyChain on page 50.

CommunitiesHuman rights are relevant to our relationships witha wider community of stakeholders. Here are a fewexamples:

Countries with poor human rights recordsSome of our stakeholders are concerned about ourpresence in countries which have a poor humanrights record such as Sudan, North Korea andBurma. While we respect these concerns, ourmedicines and vaccines are needed by localpopulations. Our products need to be registeredwith governments before they can be sold, whichalmost always requires interaction with some aspectof government. We believe, along with the UN, thatpeople should not be denied access to medicinesbecause of the regime operating in their country.See UN document.

Local communitiesWe seek to reduce the environmental impacts ofour sites, operate them safely and foster goodrelationships with local communities.

Indigenous material and traditionalknowledge As one of the world’s leading pharmaceuticalcompanies, GSK fully supports the Convention onBiological Diversity’s role in providing a frameworkfor the conservation of biological diversity, thesustainable use of its components and respect fortraditional knowledge. We also support the CBDobjective “to provide fair and equitable sharing ofthe benefits arising from the use of geneticresources”.

A wide variety of biological materials is used inbiomedical research. These include humanmaterials, non-human materials found in humans(such as bacteria and viruses), animals and plants.They are obtained from various sources. Sometimesthey will be indigenous and unique to a country orcommunity. More commonly, they will be cultivatedor bred as staple commercial products and obtainedthrough ordinary commercial channels.

Today most of GSK’s pharmaceutical research isbased on screening of large numbers of syntheticchemical compounds, rather than natural resources.We do not currently have any access and benefitsharing agreements in place. However, if GSK wereto undertake development work using indigenousgenetic resources and associated traditionalknowledge arising from any GSK natural productcollection programmes, access to those resourceswould be obtained in accordance with local laws.Contracts would be negotiated as required with theappropriate authority and we would thereby ensurethat a clear benefit was returned to the country oforigin, for example through royalties or a share ofnet profits. See our policy on Biodiversity.

SocietyImproving healthcare, particularly in the developingworld, is one of the greatest challenges the worldfaces. GSK is committed to playing its part inimproving access to medicines. We contribute tohealthcare in the developing world through ourresearch into new treatments and vaccines, bymaking our medicines available at affordablepreferential prices, by negotiating voluntary licenceswith generic manufacturers and through ourcommunity investment. For more information seeAccess to Medicines on page 18 and CommunityInvestment on page 75.

We engage with governments, multilateral agenciesand NGOs to help improve access to medicines. Wehave developed a seven point plan for use in ouradvocacy efforts. For more information see page19.

http://www.gsk.com/responsibility/cr_report_2005/human-rights/human-rights-clause.htm

http://www.unhchr.ch/tbs/doc.nsf/(symbol)/E.C.12.2000.4.En?OpenDocument

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We are supporting efforts to improve accessto medicines. This section explains our:

• Contribution to the developing world throughresearch, preferential pricing, partnerships andvoluntary licences, and community investmentin important public health initiatives

• Pricing arrangements and discount cards formiddle-income countries

• Patient Assistance Programs and discount cardsto help uninsured patients in the US

We believe that our response is not only the rightthing to do but makes good business sense.Companies that adapt their business practices toaddress such challenges will be the leaders of thefuture. In the competitive market for talentedpeople this also helps us to attract and retain thebest people.

Differential pricing increases affordability for patientswhilst maintaining support for the intellectualproperty system. Intellectual property rights areessential to the pharmaceutical industry becausewithout them we would not be able to invest inR&D for new medicines and vaccines.

By finding innovative ways to help poor people indeveloped and developing countries access ourmedicines, we are addressing ethical, reputationaland commercial imperatives. For these reasonsaccess to medicines is a strategic business driver ofGSK.

We also support under-served communitiesworldwide through donations, funding andpractical support. See community investment.

Developing worldPoverty has caused a healthcare crisis in many partsof the developing world. Millions of people do nothave access to reliable food and clean water, nevermind adequate healthcare. Despite unprecedentedresources being made available for public health,many governments are unable to fund the clinicsand staff needed to deliver basic healthcare.

The World Bank estimates that $14 per person peryear is needed to provide the most basic healthservices. Yet the average spend in sub-SaharanAfrica is just $6. The African Region of the WHOsuffers more than 24 percent of the global burdenof disease, but has only 3 percent of the world’shealth workers. Migration of African health workersto wealthier markets is exacerbating this situation.Globally, there is a shortage of well over 4 million

Access to medicinesMillions of poor people in both developed and developing countries struggle to get the

medicines they need.

healthcare workers. The AIDS pandemic is makingthe situation even worse, depriving communities oftheir greatest asset – healthy and productive people.

Tackling this crisis is a complex challenge, requiringvisionary leadership. Poverty is a huge barrier toprogress. Significant political will and extra resourcesare needed to aid development and build healthcareinfrastructure. Disease programmes need to be wellco-ordinated to ensure that health systems as awhole benefit.

We believe that it is the responsibility ofgovernments and intergovernmental agencies,supplemented by the work of NGOs, to deliverhealthcare in these countries. However, thepharmaceutical industry can play a significant rolein supporting their efforts.

We make an important contribution through:

• Research and development into diseasesdisproportionately affecting developingcountries. We believe GSK is currently the onlycompany researching both new vaccines andtreatments for HIV/AIDS, TB and malaria – theWorld Health Organization’s three prioritydiseases. Much of this research is conductedthrough public private partnerships

• Preferential pricing; specially reduced prices foranti-retrovirals (ARVs), anti-malarials andvaccines. In 2006, we shipped more than 86 million Combivir and Epivir tablets at not-for-profit prices for the treatment of HIV/AIDSto the poorest countries of the world

• Seeking innovative partnerships; GSK hasgranted eight voluntary licences for themanufacture and supply of generic versions ofour leading ARVs for treating HIV/AIDS in Africa,and is active in other partnerships such as RollBack Malaria and Stop TB

• Community investment in public healthinitiatives and partnerships that foster effectivehealthcare including major programmes totackle lymphatic filariasis, malaria, HIV/AIDS anddiarrhoeal disease. See community investment.

Research and developmentThe research and development (R&D) of new drugsand vaccines is an essential element in improvinghealth in the developing world. There are still noeffective treatments for some widespread and life-threatening diseases. Many existing treatments fordiseases such as malaria are becoming less effectivedue to drug resistance.



For HIV/AIDS which affects both developed anddeveloping countries, there is a commercial marketfor new treatments. This encourages investmentinto the required R&D. GSK is an industry leader inresearch into HIV/AIDS treatment and prevention.

However, for many diseases that disproportionatelyaffect the developing world, the lack of resourcesfor healthcare means there is often no viablecommercial market for new treatments. Publicprivate partnerships (PPPs) are helping to addressthis problem.

GSK collaborates with several PPPs including theMedicines for Malaria Venture (MMV), the GlobalAlliance for TB Drug Development (TB Alliance), theAeras Global TB Vaccine Foundation (Aeras), theMalaria Vaccine Initiative (MVI) and the InternationalAIDS Vaccine Initiative (IAVI).

GSK has created a dedicated group in ourpharmaceutical R&D organisation to focus on

diseases of the developing world (DDW). Thisincludes a DDW drug discovery centre at our TresCantos R&D site in Spain where over 100 scientistsare based, and clinical development experts in theUK and US. DDW projects are prioritised accordingto their social and public health benefits rather thantheir commercial returns. A similar group exists inour vaccines organisation based in Belgium.

In total GSK is conducting R&D into 11 diseases ofparticular relevance to developing world1. Thisincludes 14 clinical programmes for medicines andvaccines against these diseases. Seven of theseprojects are for diseases that disproportionatelyaffect developing countries. Some of these aresummarised below.

Access to healthcare – whoseresponsibility?Access to healthcare in thedeveloping world remains acomplex issue. We believe thatonly a holistic approachembracing prevention andtreatment will work. Allstakeholders have a role to play.

Pharmaceutical companies mustmake their medicines affordableto developing countries andinvest in research into diseases of the developing world – newtreatments are urgently needed.

Wealthy nations must give more.Welcome new funding is comingthrough from the Global Fund toFight AIDS, TB and Malaria, theGates Foundation, PEPFAR (TheUS President’s Emergency Planfor Aids Relief) and others – butfunds are still inadequate.Resources are needed to fundresearch, purchase medicinesand to discourage the export of trained healthcare workers fromdeveloping countries.

Developing countries must showgenuine political commitment to addressing stigma, removingimport tariffs and prioritisinghealthcare in national budgets.

Middle-income countries mustaccept their responsibilities andnot seek the lowest pricesoffered to the world’s poorestcountries.

We have developed a SevenPoint Plan for a sustainableapproach to improvinghealthcare in the developingworld, which we use in our advocacy efforts. In 2006these included:

• Submissions to the UKDepartment for InternationalDevelopment’s (DfID)consultations on its WhitePaper ‘Eliminating worldpoverty: Making governancework for the poor’, and alsoto health strategy

• Submissions to the G8governments ahead of the St Petersburg summit

• Face-to-face meetings withHilary Benn, UK InternationalDevelopment Secretary, UNSecretary General Kofi Annan,UK Government officials,White House officials, EUofficials and NGOrepresentatives

• Interactions with UNAIDS,UNITAID (the newinternational drug purchasefacility) and the World HealthOrganization

Development pipeline at end of 2006 for diseases relevant to the developing world*

Focus Pre-clinical activity Phase I Phase II Phase III Marketed

HIV ✓ integrase inhibitor Retrovir, Epivir,HIV-1 entry inhibitor Combivir, Ziagen,

NNRTI Trizivir, Agenerase,Kivexa, Telzir

Vaccines ✓ HIV Malaria Synflorix Rotarix – Malaria HIV (DNA- (P. falciparum) (pneumococcus (rotavirus)(P. vivax) antiviral TB disease) Havrix –

HIV vaccine) Hepatitis E Cervarix (Hepatitis A)Chlamydia Dengue Fever (Cervical cancer) Engerix-B –

N.meningitis (Hepatitis B)combinations Twinrix –

(Hep A&B)Infanrix/Tritanrix

– DPT family (Diptheria, Tetanus,

Pertussis)Boostrix –

(DTP acellular)Polio Sabin –

(Polio)Priorix –

(Measles, Mumps and Rubella)

Typherix – (Typhoid)Hiberix –

(Haemophilus influenzae type b)

Mencevax ACW – (meningitis)

Malaria ✓ tefenoquine CDA Lapdap, Halfan,Malarone

TB ✓

Other ✓ sitamaquine Zentel Hepatitis C (visceral (de-worming agent)

leishmaniasis) Pentostam (visceral leishmaniasis)

Banocide (lymphatic filariasis

– GSK India)

* more detailed information on our product pipeline can be found in the Annual Report

1 HIV/AIDS, malaria, leishmaniasis, dengue fever, hepatitis C,hepatitis E, N. meningitis, cervical cancer, TB, chlamydia andpneumococcal disease

http://www.gsk.com/responsibility/cr_issues/dwc_our_approach.htm



What’s different about R&D formedicines for the developingworld?GSK scientists working ontreatment projects for diseasesdisproportionately affectingdeveloping countries makeaccess to medicines a priorityright from the start of the R&Dprocess.

When researching newtreatments we produce a TargetProduct Profile (TPP) – outliningthe characteristics we arelooking for in any new molecule.As well as safety and efficacy, aTPP for a new DDW treatmentemphasises factors such as:

• Heat and humidityresistance – the productmust be able to survive in ahot climate where theremay not be refrigerationfacilities

• Ease of use – it must be easyto use in settings wherethere are limited healthcarefacilities. For example once-a-day tablets that can betaken at home arepreferable to an injectablemedicine that must beadministered in a hospital orclinic

• Affordability – price is oneof the most importantfactors. We look formolecules and formulationsthat are straightforward tomanufacture and thereforeinexpensive to produce

PROGRESS IN 2006MalariaVaccinesGSK has been working on a malaria vaccine for over20 years. In 2005 clinical trials of our malaria vaccinefor children showed that the vaccine remainedefficacious over 18 months in reducing severemalaria by 49 percent in children. Several more yearsof clinical investigation are needed but these resultsindicate it has the potential to help save millions ofchildren’s lives. In 2006 additional phase II clinicaltrials of the vaccine were initiated in Mozambique,Kenya, Tanzania, Gabon and Ghana. These aresupported by a grant from the Malaria VaccineInitiative at PATH funded by the Bill & MelindaGates Foundation, and will further evaluate thevaccine in different settings and with youngerchildren. If these trials are successful, the partnerswill initiate a large-scale phase III clinical trial. If theresults continue to be positive the vaccine could besubmitted for regulatory approval as early as 2010.

TreatmentsWe are working closely with the Medicines forMalaria Venture, which subsidises 30 scientists atour Tres Cantos facility, the World HealthOrganization (WHO) and academic partners todevelop CDA, an affordable fixed-dose artemisinincombination treatment for drug-resistant malaria inAfrica. In 2006 phase III clinical trials were initiatedat several sites across Africa. An additional phase IIIstudy is planned for 2007 involving infants betweenthe ages of three months and one year. We aim tosubmit CDA for regulatory approval in early 2008.

In March 2006, we identified a lead candidate(GW308678) to take forward into developmentfrom our pyridones project, along with a backupcandidate (GW308121). These drugs have thepotential to be highly active against drug-resistantstrains of malaria and show none of the toxicityissues that affected a previous candidate in this class.

Significant chemical and pharmaceutical develop-ment was undertaken on the anti-malarial drugGSK369796 (n-tert butyl isoquine) and we plan tostart clinical studies in humans when partnerfunding becomes available. The drug is relativelystraightforward to synthesise and manufacture, andtherefore has the potential to be relativelyinexpensive.

Clinical data for tafenoquine, a new antimalarialbeing developed in partnership with the US Military,have shown that a tafenoquine-containingcombination regimen may work faster than existingtherapies in the treatment of P. vivax malaria andmay also help to address concerns about emergingresistance to existing treatments. We are indiscussions regarding the funding of additionaldevelopment work for the treatment of P. vivaxmalaria and we plan to proceed with clinicaldevelopment in 2007.

HIV/AIDSVaccinesGSK is a leader in the global effort to develop anAIDS vaccine. We have been involved in AIDSvaccine research for more than two decades andtoday we are pursuing four separate vaccinetechnologies. A successful AIDS vaccine might needto combine several of these approaches.

GSK and the Institut Pasteur are working togetherto develop an AIDS vaccine by fusing genes from theHIV virus onto an existing measles vaccine. Theproject is being supported by a Euro 5.5 million(£3.7 million) grant from the European Union.

We are part of a public private partnership with theInternational AIDS Vaccine Initiative (IAVI) todevelop an AIDS vaccine using nonhuman primateadenovirus vector technology. The collaboration –the first ever in AIDS vaccine research between IAVIand a major vaccine company – will facilitateresearch into vaccines against types of HIV thatcirculate predominantly in Africa.

GSK Biologicals also has an in-house AIDS vaccinedevelopment project using the company’s prop-rietary adjuvant system technology. Two phase Iclinical trials have been conducted with this vaccine,in the United States in partnership with the USNational Institutes of Health’s HIV Vaccine TrialsNetwork, and the other in Belgium at GhentUniversity. These trials, completed in 2003 and 2005respectively, demonstrated that the vaccine is safeand produces a strong immune response. A thirdphase I trial in 20 HIV-infected volunteers wasinitiated in late 2005 in collaboration with thePartners AIDS Research Center at MassachusettsGeneral Hospital in Boston, and the results arecurrently being analysed. A follow-up approachexplores a similar strategy using a new antigennamed F4. A phase I clinical trial of the F4 vaccinecandidate is scheduled to begin in the near futurein Belgium.

Our fourth approach aims to develop an improvedadjuvanted envelope (Env) protein vaccine able toproduce neutralising antibodies that will providelasting protection against infection with HIV. Thisapproach is currently under preclinical evaluation.

TreatmentsIn December 2006 we discontinued the clinicaldevelopment of brecanavir, our protease inhibitorfor patients with multi-drug resistant HIV infection.We were unable to develop an oral dosageformulation that could consistently deliver thecorrect dosage of brecanavir to the patient.

Our scientists are working on new HIV medicines inseveral different drug classes. Our integrase inhibitordiscovery programme is very active and the leadcandidate 364735C, which is being developed inpartnership with Shionogi, is currently in phase IIdevelopment. New HIV-1 entry inhibitor and non-nucleoside reverse transcriptase inhibitor (NNRTI)candidates are entering the pipeline.

http://www.malariavaccine.org/

http://www.mmv.org/rubrique.php3?id_rubrique=15

http://www.iavi.org/



Experts at WHO and UNICEF have stated that accessto appropriate ARV tablets (as opposed to ARVliquid formulations) would facilitate the treatment ofchildren old enough to be able to swallow tablets.We are developing scored tablets for our key ARVs(Epivir, Ziagen, and Combivir) so they can be brokeninto two smaller doses suitable for the treatment ofchildren. This will simplify treatment and helpphysicians and carers administer the right doseefficiently and safely to children. We expect tosubmit the scored tablets for registration in 2007.

We want to continue to play an important role in the treatment of HIV in children and we supportfour paediatric clinical studies involving 2,400children in five resource-poor countries.

We provide ARVs through our international HIVCollaborative Research Trial programme to supportclinical studies run by third parties. We are currentlysupporting 21 clinical studies involving 19,500patients, of which 16 studies are taking place in sub-Saharan Africa. These include eight studies onprevention of mother-to-child transmission, one onprophylactic properties, the four studies on childrenmentioned above, four on HIV-TB co-infection, andfour on adult treatment strategies. These studies areintended to advance knowledge about the use ofARVs in resource-poor settings and also help toincrease access to ARVs.

Tuberculosis (TB)TB kills two million people a year and is a leadingcause of death among people with AIDS in thedeveloping world. But no new drugs against TBhave been discovered in more than 40 years.

VaccinesGSK and the Aeras Global TB VaccineFoundation are developing GSK’s TB candidatevaccine. Early-stage clinical trials in the US andBelgium showed that the vaccine is safe and well-tolerated and produces a strong immune response.In 2006 we began additional trials involving adultspreviously infected with TB or vaccinated withBacillus Calmette-Guérin (BCG). We plan to conductfurther studies in Africa and other locations to testthe safety and efficacy of the vaccine candidate inpopulations highly affected by TB.

TreatmentsIn 2005 we launched a joint drug discoverypartnership with the Global Alliance for TB DrugDevelopment (TB Alliance). The TB Alliance aims toaccelerate the development of affordable drugs thatwill shorten treatment and be effective againstmulti-drug-resistant strains of TB. All compoundswill be screened to ensure they can be taken withHIV treatments. The TB Alliance is supporting 25 full-time scientists working exclusively on the TBdrug programme at Tres Cantos. GSK is contributinga matching number of staff and all remainingoverhead costs. Around 1.5 million compoundshave now been tested for anti-TB activity and wehave four pre-clinical TB projects underway.

In partnership with Stellenbosch University in SouthAfrica, GSK is supporting grant applications to funda programme to identify “biomarkers” in peoplewho may respond to specific treatments. Suchbiomarkers can be used to predict whether or notpatients will respond quickly to treatment or if TB islikely to recur.

RotavirusRotavirus infection is the leading cause of severediarrhoea and vomiting (gastroenteritis) in childrenunder two and kills around 600,000 children eachyear – one child every minute – mostly in developingcountries. Our vaccine, Rotarix, for the prevention ofrotavirus induced gastroenteritis, was launched inMexico in January 2005 and has now beenapproved in 89 countries and is being registered ina further 26. Most registrations have been in thedeveloping world. The vaccine is now part ofnational immunisation programmes for all new-born babies in eight developing countries includingBrazil, El Salvador, Mexico, Panama and Venezuela.We have distributed 12.5 million doses since launch.Early in 2007, GSK received prequalification statusfor its rotavirus vaccine from the World HealthOrganization (WHO). This is required before UNorganisations and GAVI (formerly known as theGlobal Alliance for Vaccines and Immunisation) canpurchase a vaccine. This was timely as itcomplemented the decision by GAVI in late 2006 toprovide funding to support the introduction ofrotavirus vaccines in developing countries.

Cervical cancerCervical cancer is the most common cause of cancerdeaths in women in the developing world. Currentpublished data suggest that our Cervarix vaccinecould reduce by 70 percent a woman’s lifetime riskof developing cervical cancer. We applied forregistration of the vaccine in Europe as well as 28 countries in our International region during2006. We are on track to file for regulatory approvalin the US by April 2007. We are committed tomaking Cervarix widely available, and will make itavailable to low-income countries at preferentialprices through GSK’s tiered pricing model forvaccines.

We are conducting clinical studies on the use of thevaccine in low income settings.

LeishmaniasisSitamaquine is our potential new once-a-day oraltreatment for visceral leishmaniasis. This diseaseaffects half a million people a year in the developingworld and is usually fatal if untreated. GSK isproviding all the funding for this project. A newtreatment for visceral leishmaniasis is urgentlyneeded, since current medicines are eitherimpractical or becoming ineffective due to drugresistance or are simply unaffordable. Sitamaquinehas shown good efficacy in phase II trials. The trialsalso suggest that a shorter treatment period can beachieved – perhaps up to half of the four weeksneeded for current treatments. The low costsuggests that sitamaquine could be the first trulyaccessible treatment for visceral leishmaniasis whichaffects the poorest of the poor.

http://www.aeras.org/

http://new.tballiance.org/home/home-live.php

http://www.gavialliance.org/



PREFERENTIAL PRICINGPoverty, lack of political will and insufficient medicalinfrastructure (hospitals, clinics and health workers)are the biggest barriers to accessing healthcare indeveloping countries.

The affordability of medicines is also important andthere are two elements to this:

• The ability of governments or patients to payfor medicines. Governments and inter-governmental agencies must make significantadditional financial resources available to solvethis problem.

• The price at which medicines are sold – an areaGSK can help to address.

We are making ARVs and anti-malarials available todeveloping countries at more affordable prices. Thisis a major commitment that we call ‘preferentialpricing’. It includes not-for-profit (nfp) prices for theworld’s poorest countries, and discounted prices forwealthier developing and middle-income countries,see page 23.

Other factors in the supply chain such as taxes,tariffs and distributor mark-ups can significantlyincrease the price of medicines. These factors areout of our control and should be addressed bygovernments.

For middle-income developing countries wecontinue to negotiate public sector prices on a case-by-case basis to improve affordability, see page 23.

GSK vaccines are also available at preferential prices.We use a tiered pricing structure for vaccines – pricesfor the developing world can be as little as a tenthof those for developed countries. We work withmultinational organisations such as UNICEF, theWorld Health Organization and the Pan AmericanHealth Organisation, governments and non-governmental organisations, to provide appropriateand affordable vaccines for developing countries.This includes basic polio vaccines as well as speciallydeveloped combination vaccines that target severaldiseases. In 2006, of the 1.1 billion vaccines weshipped, around 75 percent went to the developingworld. This is lower than in previous years due to thetiming of some significant tenders.

Progress in 2006We shipped 27 million tablets of nfp Combivir and59 million tablets of nfp Epivir to the developingworld compared with 45 million and 81 milliontablets respectively in 2004 and 2005.

This decrease was expected and is primarily due tomore customers purchasing ARVs from genericmanufacturers including those licensed by GSK. Thisis a positive indication that our licensing policy isworking.

In the last year generic manufacturers licensed byGSK have significantly increased theirmanufacturing capacity and ability to supply largerquantities of ARVs at lower prices. We welcome thistrend as it gives customers in sub-Saharan Africagreater choice and contributes to better security of

supply. In 2006 our licencees supplied over 120 million tablets of their versions of Epivir andCombivir to Africa.

We will continue to look for new customers for ournfp ARVs in these countries and to regularly reviewour nfp prices. However, it may well be that ourlicencees are able to produce first-line ARVs at lowercosts and will increase their share of the business.

A massive scale-up in treatment for HIV/AIDS isplanned by the global community in the next fiveyears. We are negotiating agreements with contractmanufacturers to ensure we have the capacity tocontribute to meeting this demand.

The WHO published new treatment guidelines forpatients with HIV. Our ARV abacavir is nowrecommended as a first-line treatment option. InMay we reduced the nfp price of abacavir-containing ARVs by 30 percent and made our twonew ARVs – Kivexa and Telzir -– available at nfpprices.

There have been concerns that pharmaceuticalcompanies are not doing enough to registeressential medicines in developing countries and thatthis prevents these countries from taking advantageof preferential pricing offers. We continue to reviewthe registration needs for our key ARVs in our 64 target developing countries to ensure that Epivir,Retrovir and Combivir are available as widely asnecessary and possible.

A current focus is to also make abacavir andabacavir-containing ARVs available in theselocations. We will prioritise our efforts where thereis the greatest medical need – in particular the 15 PEPFAR countries and other developing countrieswith a significant HIV burden where high-qualityalternatives to abacavir are not available.

Product diversion, where not-for-profit medicinesare illegally shipped back for sale in wealthiercountries, denies treatment to patients in poorercountries. Our anti-diversion measures includeaccess packs (such as red rather than white tablets)for Combivir, Epivir tablets, Epivir solution, Trizivirand Retrovir solution which are now registered inmore than 50 countries. GSK was the first companyto receive a Positive Opinion (for Epivir and Combivirred coloured tablets) from the European MedicinesEvaluation Agency (EMEA) via the Article 58 regulatory procedure for medicines intended foruse outside of the EU. This should serve to speed upregistration of red coloured tablets in developingcountries.

Public private partnerships (PPPs)What is a PPP?In a PPP, companies such as GSKprovide the R&D, technology,manufacturing and distributionexpertise. Academic institutionsmay also provide research anddisease area knowledge. Publicsector partners, governments, or organisations such as theGates Foundation, help fund thedevelopment and delivery costsand ensure that medicines get to the people who need them.Funds are usually channelledthrough organisations such asthe Medicines for MalariaVenture.

Why are PPPs needed?GSK wants to invest in researchto tackle diseases that blight thedeveloping world. However,there is a dilemma. We must beprofitable to sustain our businessand to continue to develop newmedicines. This business modeldoes not work in cases wherethere is no prospect of acommercial return.Unfortunately, lack of resourcesmeans there is limited marketfor new treatments for diseasesthat disproportionately affectdeveloping countries. The PPPmodel, in which business and the public sector work together,offers a solution.

How does the partnership workin practice?Drug discovery takes place at our dedicated diseases of thedeveloping world DiscoveryCentre at Tres Cantos. GSKprovides the facilities and meetsall the running costs. There areover 100 GSK scientists at TresCantos, half of whom aresubsidised by our partnerorganisations – the Medicines for Malaria Venture (MMV) andthe Global Alliance for TB DrugDevelopment (TB Alliance).

As compounds move into clinicaldevelopment, GSK provides theclinical, regulatory andmanufacturing expertise andresources through our globalR&D and supply network.Partners help fund the cost ofrunning clinical trials and addressissues of access and distribution.This reduces the costs ofdevelopment and gets newproducts to patients faster.Research programmes areoverseen by joint steeringcommittees with representativesfrom GSK and our partners.

Does this affect the price ofnew treatments?Importantly, under the terms of our agreement, we arecommitted to make any newtreatments resulting from PPPsaccessible to the developingworld at affordable prices.



A report from the UN-led Accelerating AccessInitiative (AAI), suggests that by September 2006more than 738,000 people living with HIV/AIDS indeveloping countries were receiving treatment withat least one ARV supplied by the sevenpharmaceutical companies in the AAI (comparedwith 221,000 people on treatment in 2004). Thisincludes 424,000 patients in Africa.

Extending preferential pricingWe are considering extending our preferential pricesin Africa to a wider range of products. However, anumber of commercial factors and the overallmarket environment must be considered. Thefindings from our five country pilot study areinforming this evaluation.

VOLUNTARY LICENSING ANDPARTNERSHIPSGSK wants to play its part in the global response tothe HIV/AIDS pandemic. Our preferential pricingarrangements enable us to supply highlydiscounted, safe and quality products for as long asthey are needed. In some situations voluntarylicences also help to increase the supply ofmedicines.

Voluntary licences (VL) enable local manufacturersto produce and sell generic versions of our products.We granted our first VL in 2001 and have nownegotiated eight licencing agreements for our ARVsin Africa. This includes a new licence agreed in 2006with a South Africa company. Some of our VLs coverindividual countries or trade blocks whilst otherscover all of sub-Saharan Africa. VLs are not auniversal solution to HIV/AIDS but a specificresponse to a particular set of circumstances.

A decision to grant a VL depends on a number offactors including the severity of the HIV/AIDSepidemic in that country, local healthcare provisionand the economic and manufacturing environment.Selecting the most appropriate licensee is key. Weneed to be sure that the manufacturer will be ableto provide a long-term supply of good qualitymedicines and will implement safeguards to preventthe diversion of medicines to wealthier markets.

Nu

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mill

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)

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02002 2003 2004 2005 2006

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7.7 16.2

66.4

126.3120

86.3

GSK licencees

There has been much discussion about the use ofcompulsory licences, under which intellectualproperty rights are taken away from rights holders.Compulsory licenses are one of the flexibilities in theWorld Trade Organisation’s TRIPs agreement onintellectual property. GSK believes that widespreaduse of compulsory licences will undermine theintellectual property framework and be counter-productive in the long term. R&D into newtreatments, especially where commercial marketsexist, such as for HIV/AIDS, depends on protectionfor intellectual property.

MIDDLE-INCOME COUNTRIESMiddle-income countries are more economicallydeveloped but often have healthcare demands thatoutstrip their available resources. These challengesare made worse by a growing AIDS epidemic inmany middle-income countries.

We can only afford to supply products at low pricesin the world’s poorest countries if we can still makean adequate return on them in wealthier markets.Nevertheless, we recognise that many middle-income countries need assistance.

We negotiate preferential pricing arrangementswith middle-income countries on a case-by-casebasis. This is done bilaterally through dialogue withgovernments. We believe this is the best approachsince the disease burden, and resources available toaddress, it vary significantly from country to countryand also within countries. These arrangementscombine a viable and sustainable commercial returnfor GSK with improved affordability for thehealthcare systems concerned.

For several more developed countries we are alsointroducing discount cards for senior citizens, seedeveloped world.

Activity in 2006RussiaWe announced an agreement to supply ARVs tothe Russian Government at discounted prices. Thisis the first direct, federal purchase of anti-retroviralmedicines in Russia. During 2006 GSK supplied over90,000 treatment packs to the Russian Governmentof its HIV medicines, Combivir, Epivir and Ziagenwhich were dispensed by hospital centres across thecountry. This agreement will contribute to theRussian Government’s target of reaching 15,000patients by the end of 2006. This target has beendoubled to 30,000 in 2007.

ChinaIn September 2006, we signed a voluntary licencewith Simcere, a Chinese manufacturer, grantingthem the right to manufacture and sell zanamivir(Relenza) containing products in China, Indonesia,Thailand, Vietnam and all LDCs. Relenza is an anti-viral which can help treat influenza. More than halfof all human cases of flu caused by the H5N1 virushave occurred in the Asia-Pacific region.

Our not-for-profit prices insummary

Which medicines? All our HIV/AIDS (ARVs) andmalaria treatments.

Which customers? Public sector customers and not-for-profit organisations in alleligible countries and privateemployers in sub-Saharan Africawho provide treatment for non-insured staff.

Which countries? All the Least DevelopedCountries and sub-SaharanAfrica, as well as countries witheligible Global Fund and PEPFARprojects – over 100 countries intotal. See eligibility for not-for-profit prices in the backgroundsection of our website for moredetails.

What does it cost? Combivir, our leading ARV, isavailable at $0.65 a day. Our nfpprices also include delivery andinsurance costs.

How much? Our nfp prices are applicable toorders of any size and are notdependent on large orderquantities.

For how long?Our nfp prices are sustainable –we do not make a profit onthem, but we do cover ourmanufacturing and distributioncosts. Therefore we can continueto supply them in the long-term.

Supply of preferentially priced Combivir and Epivir tablets



Intellectual property rights in IndiaIndia has developed a large generics industry partlyas a result of national legislation that did not permitpatent protection for pharmaceutical products. In2005, to comply with the WTO Trade RelatedAspects of Intellectual Property Rights (TRIPs)agreement, India introduced legislation that allowedfor the patenting of pharmaceutical products. In thecontext of the access to medicines debate, someargue that this obligation on India will result in anend to the provision of cheap generics andundermine the future availability of affordableinnovative products.

GSK believes that the intellectual propertyprotection provisions set out in TRIPs are vital to thedevelopment of medicines to meet unmet medicalneeds around the world. A robust IP system isessential to encourage research-based companiesto undertake risky and hugely expensive R&D todiscover new and better medicines and vaccines.Most of the generic medicines already on themarket in India will not be affected by theintroduction of patent protection. They will continueto be available in India and elsewhere in the sameway as they are today. We also believe that thepublic health safeguards in the TRIPS agreement willprevent access problems in the future.

The root cause of developing countries’ inability toaddress their healthcare problems does not lie withthe patenting system but with a lack of funding, alack of political will and inadequate healthcareinfrastructure. None of these factors is affected byintellectual property rights or by full implementationof TRIPs in India or elsewhere.

DEVELOPED WORLDAccess to medicines is not just an issue for thedeveloping world. Even in developed countriessome patients cannot afford the medicines theyneed. This is a particular problem in the US wheremany people do not have health insurance. GSKhas developed Patient Assistance Programs and adiscount savings card in the US to help patientswithout insurance.

We are also introducing discount savings cards inseveral middle-income countries to enablequalifying patients to obtain prescription medicinesat a discount price.

Programmes in the USPatient Assistance Programs provide prescriptionmedicines to low-income, uninsured patients freeor at minimal cost. GSK operates severalprogrammes, including Commitment to Accesswhich covers cancer treatments and Bridges toAccess which covers other medicines for out-patients. Patients are registered through one phonecall from a patient advocate and receive medicine attheir local pharmacy or by mail order. In 2006,402,000 patients received GSK medicines worth$370 million through these programmes, comparedwith $464 million in 2005. The value of themedicines is calculated using the wholesaleacquisition cost (WAC).

This is a significant reduction from last year andreflects the introduction of a new drug benefit aspart of the US Medicare programme – known asMedicare Part D. Prior to this, Medicare patients didnot have prescription coverage for most medicines.Once a patient had enrolled in a Medicare Part DPlan, they became ineligible for our existing patientassistance programmes (Bridge to Access andCommitment to Access). However we still recognisethat, even with this drug coverage, these patientsmay still need assistance. A new programme GSKAccess provides the extra help some low incomesenior and disabled Medicare Part D patients needin getting their medicines. This programme allowsthose who spend $600 out of pocket in 2007 forprescription medicines, and whose incomes arebetween 135 percent to 250 percent, (up to 350percent for Oncology products) of the FederalPoverty Level to apply and if eligible obtain GSKmedicine for free for the remainder of 2007. Seewww.gsk-access.com for more information. Weexpect this new programme to increase the numberof patients in our assistance programmes during2007.

In January 2005, GSK and nine other pharma-ceutical companies created a discount savingsprogramme to improve access to medicines foruninsured Americans who are not eligible forMedicare. The Together Rx Access card providessavings of 25-40 percent on more than 300 medicines. Approximately 37 million people,around 80 percent of the people in the US withoutprescription insurance, are eligible to enroll. Theparticipating companies enrolled 469,888 people in2006, who received 1.6 million 30-day prescriptionssaving $24million (based on WAC). Of these, GSKprovided discounts of $3.1 million to 98,955patients through 31,737 30-day prescriptions.

Orange Cards in middle income countriesOur Orange Card in the Ukraine gives all asthmaand chronic obstructive pulmonary disease patientswho are under 25 or over 50, an average discountof 19 percent on the most popular presentations ofGSK’s Seretide asthma medicine. Asthma patients ofany age who suffer disabilities or who are affectedby the Chernobyl nuclear disaster are also eligible.Eligibility is assessed by the patient’s doctor andpatients can receive the medicine at participatingpharmacies. A hotline number has been set up tohelp patients find their nearest pharmacy. In 2006Orange Card discounts totalled $119,722(£65,000).

In Lithuania, our Orange Card gives senior citizensand the disabled an average discount of 40 percenton the patient co-payment on all GSK prescriptionmedicines. So far more than 25,000 patients have applied for an Orange Card and over 200 pharmacies (20 percent of the pharmacies inLithuania) are registered to participate. In 2006,25,000 patients received discounts worth£150,000.

http://www.commitmenttoaccess.com/

http://www.bridgestoaccess.com/

http://www.medicare.gov/medicarereform/drugbenefit.asp

www.gsk-access.com

http://www.togetherrxaccess.com/home.html



GSK’s Orange Card in Bulgaria provides low-incomepatients with a discount on GSK medicines to treatchronic diseases such as asthma, chronic obstructivepulmonary disease and diabetes. We broadened thescope of our Orange Card in 2006 in response tochanges in the Bulgarian reimbursement systemwhich meant that 50,000 patients with chronicdiseases could no longer access state assistance fortheir currently prescribed medicines. The OrangeCard provides direct benefits (in the form of subsidy)to patients suffering from three important chronicdiseases in Bulgaria – asthma, diabetes and benignprostate hyperplasia. The 2006 GSK investment inthe Orange Card in Bulgaria is now Euro 4.5 million(£3.1million).

Summary of GSK discount programmes

Country GSK programme Number of patients Value of benefit to patients

US Patient Assistance Programs – Free or minimal cost medicines for low-income, 402,000 received $370 millionuninsured patients prescriptions (£200 million)

US Together Rx Access – Discounts for all low-income uninsured patients. 98,955 received $3.1 millionJoint industry programme prescriptions (£1.6 million)

Bulgaria Orange Card – Discounts for low-income Euro 4.5 millionpatients with chronic diseases 50,000 approx (£3.1 million)

Lithuania Orange Card – Discounts for senior citizens and disabled people 25,000 £150,000

Ukraine Orange Card – Discounts on asthma and $120,000COPD medicine for patients under 25 or over 50 not available (£65,000)



New medicines and vaccines have broughthuge benefits to the health and quality of lifeof millions of people over the last 100 years.

But continued R&D remains as important as ever.There are still many serious, debilitating and life-threatening illnesses for which there are no effectivetreatments or where treatments could besignificantly improved.

Our goal is to build the best product pipeline in the industry. In 2006 we invested £3.5 billion ($6.4 billion) and employed over 15,000 people inR&D.

Our research aims to address unmet medical needs.Our pipeline includes compounds with the potentialto make a major contribution to healthcare indeveloping countries, see Access to medicines.Throughout the R&D process we seek the views ofpatients to inform our research. Focusing on patientneeds drives innovation which brings commercialsuccess.

We recognise that biomedical and pharmaceuticalresearch raises ethical concerns – from the use ofnew technologies to the objective reporting ofclinical trial results. We are committed to attaininghigh ethical and scientific standards in all our R&Dwork. This section explains our approach to:

• Animal research, and our efforts to reduce,refine and replace animal testing

• The conduct of clinical trials. How we ensureGSK sponsored clinical trials are carried out tothe same high ethical standards irrespective ofwhere they are conducted

• Training and auditing for clinical trials. How wetrain GSK employees involved in clinical trialsand how we check that trials are carried out toGood Clinical Practice (GCP) standards

• Clinical trial information and results. How wepublicly disclose trial information and resultsthrough journal articles, the GSK Clinical TrialRegister and other public databases

• Patient safety. How we monitor the safety ofour medicines

Background information on our approach to newtechnologies, including pharmacogeneticresearch and the use of transgenic animals, isavailable on our website.

ResearchResearch and development (R&D) of new medicines and vaccines is at the core of our

business and makes a significant contribution to society.

ANIMAL RESEARCHAnimal research and testing is an essentialcomponent of understanding disease andevaluating safety and effectiveness of new vaccinesand prescription and over-the-counter medicines.

Safety regulations require us to test all newmedicines on animals before they are tested inclinical trials using humans. Most vaccines have tobe tested on animals each time a new batch isproduced.

GSK has 17 animal research laboratories in Europe,Asia and the US. Some animal research is conductedby external contractors on our behalf. Thisrepresents an additional 9 percent of animals1. Weestimate that animal research accounts for around5 percent of all GSK research expenditure.

Around 99 percent of the animals used by GSK arerodents (such as rats, mice, guinea pigs) and rabbits.The remaining 1 percent includes fish, ferrets, pigs,dogs, cats and primates.

Ultimately GSK would like to see the importantbenefits of research being achieved without the useof experimentation which has the potential to causepain or distress to animals. We do not believe thiscan be achieved in the foreseeable future, thereforeGSK is committed to the 3Rs – reduction,refinement and replacement of animals in research– and to achieving high standards of animal welfare.Our goal is to use animals only when scientificallynecessary, use as few as scientifically feasible and tominimise pain and distress.

This approach continues to have an impact. In 2006there was a small increase in the absolute numbersof animals used from a baseline in 19942, howeverthe growth in R&D activity continues to greatlyexceed any increase in animal use.

Animals used by GSK in 2006 %

mouse 67.7

rat 25.0

guinea pig 5.2

other rodent 0.1

rabbit 0.8

other 1.2

Our product pipelineGSK’s R&D pipeline includespotential new treatments andvaccines for many serious anddebilitating conditionsincluding:

• Alzheimer’s disease

• Asthma

• Atherosclerosis

• Cancer

• Depression

• Diabetes

• Heart disease

• HIV/AIDS

• Influenza

• Malaria

• Rheumatoid arthritis

• TB

1 We started estimating our external animal use in 2002, and to 2006 have recorded external animal use as representing 3.3%, 4.5%, 7.1%,6.7%, 8.9% of the total animal use in our own laboratories. This change may both represent a rise but also improvement in reporting ofdata from our diverse external collaborations.

2 We use 1994 as a baseline for comparison as this was the first year we were able to collect reliable data. The increased use in 2006 wasdue to more mice being used, especially for vaccines testing.

http://genetics.gsk.com/index_flash.htm

http://www.gsk.com/research/about/about_animals_roles.html

http://genetics.gsk.com/index_flash.htm



Change in R&D activity compared to change in number ofanimals used in GSK research laboratories*

*These data do not include animal research conducted by external contractors on our behalf. R&D activity combines our R&Dbudget and our vaccine sales, the two main drivers of animal use.Vaccine sales are included since most vaccines have to betested on animals each time a new batch is produced.

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Change in R&D activity compared to change in number of animals used in GSK research laboratories*

1994199519961997199819992000200120022003200420052006

100.0%85.9%83.1%86.5%95.5%92.5%92.8%92.4%

103.3%105.0%103.9%102.3%109.8%

100.0%120.4%128.8%135.2%140.7%154.0%168.6%176.2%191.8%195.8%203.0%227.6%259.0%

Year Animals used R&D activity



Recent GSK advances in the 3Rs:• We replaced all wild-caught

primates used for safetytesting of oral polio vaccineswith primates bred incaptivity. In 2006 we alsoreduced the number ofprimates used for thispurpose by 58 percentcompared to 2005. We areprogressing the replacementof all primates used forsafety testing of oral poliovaccines with geneticallymodified mice; the date toachieve this remains subjectto regulatory approval.

• We replaced rats used tosupply brain tissue with a rat stem cell culture. Thiscontinuously produces morecells without the need touse animals, avoiding theuse of 2,000 rats each year.

• We have increased thenumber of macaquemonkeys housed in pairsallowing more socialinteraction which improvesanimal wellbeing.

• We introduced use ofcatheters and automatedblood collection systems tosignificantly reduce thenumber of rats used inpharmacokinetic studies(studies into the absorption,distribution, metabolismand excretion of medicines).The new approachsignificantly reduces animaluse by 60 percent in thiscommonly used type ofstudy.

More information on how weimplement the 3Rs is availableon our website.

Regulation and internal controlsOur animal research laboratories comply withnational laws on animal welfare. Regulators carryout regular unannounced inspections of our sites.

All proposed research and testing using animals isconsidered by GSK ethical review committees. GSKlaboratories, and any external laboratoriesconducting research on our behalf, must follow ourcode of practice on animal research whichincludes best practice standards for animal care anduse.

Independent accreditation by the Association forthe Accreditation and Assessment of LaboratoryAnimal Care (AAALAC) International is one waylaboratories can demonstrate that they meet bestpractice standards. Ten of our animal laboratoriesare accredited by AAALAC. These are located inBelgium, Italy, Spain, the UK and the US and thisaccreditation now covers more than 91 percent ofthe animals used in GSK-owned laboratories. Ouraim is to achieve AAALAC accreditation for all ourlaboratories1.

As we expand our business into new markets,increase vaccine production and work with moreexternal partners to develop new medicines, we willalso conduct animal research and testing in morecountries worldwide. We are assessing the impactof these changes on our programme of animalresearch and in 2006 we updated our policy on thereview of studies we sponsor externally.

The three RsImplementing the 3Rs commits us to:

• replacing animal studies with alternativemethods wherever possible

• reducing the number of animals used in eachstudy

• refining studies to minimise pain and maximisethe information obtained from each animal

For example, we are currently replacing the use ofprimates with mice in vaccine batch testing. Beyondthis we are looking at ways to use the advances inquality control processes for vaccine production tochange testing requirements so that eventually itwill not be necessary to test each batch of vaccineson animals.

Training and awarenessWe provide training on the 3Rs to all staff who areinvolved in the care and use of animals and publishquarterly news bulletins on the 3Rs to raiseawarness.

Our ethical review committees of GSK scientists,statisticians, senior managers, animal techniciansand veterinarians encourages a 3Rs culture at GSKthrough seminars and ‘Recommended Practice’guidelines for scientific procedures and animalwelfare.

Our Animal Welfare Awards recognise employeeswho have made outstanding advances inimplementing the 3Rs. In 2006 a research teamlooking at smoking cessation products, received theaward for reducing by 40 percent the number ofrats used in studies into the addictive properties ofsmoking products.

Sharing best practiceWe fund the UK National Centre for the 3Rs’(NC3Rs) prize which recognises the best newtechniques for implementing the 3Rs. In 2006, the£10,000 prize money was won for a technique thatreduced the number of mice subjected to aninvasive procedure used in bacterial diseaseresearch.

Together with industry partners in the Association ofthe British Pharmaceutical Industry, we are fundinga three-year job post at the NC3Rs to encouragesharing of best practice.

In 2006, we donated our internal guide to refiningthe collection of blood samples from laboratoryanimals. This is now available for free on the NC3Rswebsite.

We are involved in many other initiatives toencourage research into the 3Rs and to stimulatethe sharing of best practice on animal research. In2006, GSK:

• Took part in working groups run by the NC3Rson replacing and reducing the use of primatesin research

• Supported the Universities Federation forAnimal Welfare’s projects to improve housingand husbandry for laboratory animals

• Participated in the European RSPCA, FRAMEand industry initiative to reduce the use of dogsin safety testing

• Supported the National Academy’s Institute ofLaboratory Animal Research and the JohnsHopkins Center for Alternatives to AnimalTesting in the US

Advocacy We work with stakeholders to encourage reduction,refinement and replacement of animal research andtesting. In 2006 we:

• Joined the European Partnership for Alternativesto Animal Testing, which is a collaborationbetween the European Commission and majorcompanies from seven industry sectors

• Worked with a range of stakeholders to ensurethe impact on animals of the REACH chemicalsinitiative were addressed. We believe thatexisting data records, long-term humanexposure records, and modern techniques thatdo not use animals can provide most of, if notall, the data required for product testing ofmany of the established products that havebeen in use for some time

1 In 2006 we closed a laboratory in Japan, acquired laboratoriesin Croatia and Canada, and established GSK-managedlaboratories in Singapore and the US, giving a current total of 17 GSK laboratories where we use animals.

http://www.gsk.com/research/about/about_animals_care.html

http://www.aaalac.org/

http://www.gsk.com/research/about/about_animals_3rs.html

http://www.nc3rs.org.uk/



• Gave evidence to the UK Academy of MedicalSciences study on the use of non-humanprimates in research. This confirmed that astrong justification is essential for any such use.However it concluded that where there are noother means to address clearly definedquestions of particular biological or medicalimportance, there is a strong scientific andmoral case for the carefully regulated use ofnon-human primates

• Participated in a study on animal pain anddistress in research. The study conducted by theLaboratory Animal Science Association and theAnimal Procedures Committee assessedwhether the severity of pain and distress couldbe retrospectively reported. The study foundthat most research institutions already keep arecord of pain or distress experienced byindividual animals. It concluded that making thisinformation public would be useful and wouldincrease transparency. The study is now lookingat ways this could be done without introducingexcessive bureaucracy

Communicating our approachSome people hold strong views on animal researchand testing. We believe it is important to explain theneed for animal research and testing and to be openabout what we do.

Our laboratories host visits from schools, colleges,animal welfare organisations and others. In 2006,we made over 28 visits to UK schools and hosted 4 site visits. In the US we host regular ScienceLiteracy teacher workshops on animal research withthe Pennsylvania and North Carolina Associationsfor Biomedical Research. Over 1,000 teachers havetaken part since 1994.

We engage regularly with animal welfareorganisations and our investors, as well ascontributing to the debate in the media. An articleon animal research in the UK Times (29th April 2006)followed a visit to a GSK UK animal laboratory.

In 2006, SustainAbility, the corporate responsibilityconsultancy and think-tank, benchmarked ourreporting on animal research. They concluded it was“Overall, the most comprehensive discussion ofanimals in research in the industry’s reporting” andthat “animal welfare concerns are integrated intoGSK’s operations and contracting”.

ProtestWe accept the right of lawful protest against animalresearch as a part of a free society, but condemnthe use of violence and intimidation by some whoare opposed to animal use. Our public stanceagainst extremism has been complimented in themedia (UK Guardian 9th May 2006), and by the UKPrime Minister (UK Sunday Telegraph 14th May2006) for its robustness and openness. We welcomethe apparent shift in the UK away from extremismto debate, and the passage of new legislationagainst animal extremism in the United States.

CONDUCT OF CLINICALTRIALSThe safety and effectiveness of new medicines andvaccines must be evaluated in human clinical trialsbefore they can be approved for marketing.Regulators will only give approval if trialsdemonstrate that a product is safe and effective andthat its benefits outweigh any risks from potentialside effects.

A new product will typically be tested through threestages of clinical trials. These involve both healthyindividuals and patients with the relevant disease.

In 2006 there were 159 projects in clinicaldevelopment.

Standards for clinical trialsAll GSK clinical trials, wherever they are carried out,are conducted according to the Good ClinicalPractice (GCP) guidelines developed by theInternational Conference on Harmonisation (ICH)and the principles contained in the World MedicalAssociation Declaration of Helsinki on the ‘EthicalPrinciples for Medical Research InvolvingHuman Subjects (2004)’.

The ICH guidelines provide an internationallyaccepted ethical and scientific quality standard fordesigning, conducting, recording and reportingtrials. They cover issues such as the selection andtraining of trial investigators, gaining informedconsent from trial participants, monitoring andquality assurance.

Trial protocols (the plan for how a clinical trial will beconducted) are reviewed by external regulatoryagencies in the relevant countries when required,and all protocols are considered by the relevantethical review committees which cover the siteswhere studies will take place.

An ethics review committee is composed of laypeople, medical professionals and scientists. Theyassess whether a trial is justified and whether it isdesigned and will be conducted according toappropriate ethical standards. Ethics committeeshave the power to reject or stop a clinical trial.

Safety data are routinely collected throughoutdevelopment programmes and are reported toregulators in line with applicable regulations. Dataare also reviewed by GSK on an ongoing basis forany safety signals (events not necessarily caused bythe treatment that require further exploration). GSKhas a Global Safety Board (GSB) led by the ChiefMedical Officer and composed of senior physiciansand scientists. The GSB oversees the safety of allinvestigational and marketed compounds,approving the adminis-tration of investigationalcompounds to humans and defining the doses andduration of treatment that are considered safe. TheGSK Global Safety Board is responsible both forapproval of pivotal protocols (pivotal trials are thosewhich provide the primary data on which regulatoryapproval is based) and internal assessment of anyissues related to patient safety that arise during theproduct development programme or when it ismarketed.

Our policy on Payments toHealthcare Practitioners andInstitutions Conducting GSK-Sponsored or GSK-SupportedClinical Studies • All clinical trial investigators

are selected solely on theirqualifications to conductclinical research. Their historyof using GSK products is nottaken into account.

• Payments to practitionersreflect fair market value forthe work performed.

• No payments are offered ormade that could influencetheir judgement on whetherto enrol or maintain aparticipant in a clinical study.

http://www.gsk.com/investors/product_pipeline/docs/pipeline.pdf

http://www.fda.gov/oc/gcp/

http://www.wma.net/e/policy/b3.htm



We audit clinical trials to ensure they are conductedto the appropriate standards. See Training andAuditing for Clinical Trials.

Clinical trials outside Western Europe andNorth AmericaMost clinical trials take place in Western Europe andNorth America but GSK is starting to perform moretrials in regions such as Central and Eastern Europe,South Africa, Latin America and parts of Asia.

We seek to conduct clinical trials where:

• The population is relevant to the scientificquestion and where the results can begeneralised to broader populations

• There are qualified investigators capable ofcarrying out the research

• There are people who qualify for participationin the research

• The research can be carried out as quickly andefficiently as possible

All GSK-sponsored clinical trials are conducted tothe same ethical standards irrespective of thelocation. All studies meet international and nationalregulatory and legislative requirements and areconducted in accordance with the principles ofGood Clinical Practice (GCP) standards, theprinciples contained in the World MedicalAssociation Declaration of Helsinki on the ‘EthicalPrinciples for Medical Research Involving HumanSubjects’ (2004) and GSK’s own policies.

GSK is committed to investing in R&D for diseasesdisproportionately affecting developing countries,see Access to Medicines. These compounds mustusually be tested through clinical trials in developingcountries where the disease is prevalent and themedicine is relevant for the local population.

In some of the least-developed countries additionalsafeguards may be needed. For example, in somecultures, while still complying with normal ethicaland legal requirements, additional steps are takento match the objectives of informed consent to localculture. So for example local leaders and/or familymembers may need to be involved in the consentprocess.

You can read our position on clinical trials in thedeveloping world in the background section ofour website.

TRAINING AND AUDITING FORCLINICAL TRIALSWe provide training to ensure that clinical trials areperformed to high ethical and quality standards. Weaudit the conduct of clinical trials to ensure they arecarried out according to the study protocol, GSKStandard Operating Procedures (SOPs), GoodClinical Practice (GCP), current regulatory directives,laws, guidelines and the ethical considerations ofthe Declaration of Helsinki.

All employees involved in designing, conducting andmonitoring GSK-sponsored trials are trained in GCP.Training is mandatory and employees must havecompleted the required training before starting orchanging jobs.

In 2006 there were 14,988 training activities relatedto GCP. Each ‘training activity’ represents asuccessful completion of an e-learning module orinstructor-led course related to GCP by one of ouremployees or contractors.

We keep detailed training records which areroutinely requested by regulatory authorities whenundertaking an inspection to assess the competenceof employees undertaking clinical trials.

GSK’s internal audit department audits GSK systemsand processes involved in the conduct of trials, aswell as auditing external clinical researchorganisations and investigators performing clinicalresearch on our behalf. A risk managementapproach is used to determine which trials areaudited. Risk factors evaluated include thecomplexity of the study, the patient population, thelocation of the study, previous audit history and anyunusual findings during the conduct of the study.

In 2006, 213 audits were conducted:

• 132 audits of investigator sites conducting GSK-sponsored trials. This represents approximately5 percent of investigator sites participating inpivotal clinical trials

• 22 audits of internal GSK systems and processesused in managing clinical trials and data

• 29 audits of clinical research organisationscarrying out clinical trials on GSK’s behalf

• 13 audits of GSK local operating companies,including the medical departments managingthe clinical research in those countries

• 17 “For Cause” audits were conducted inresponse to suspected irregularities and sixinvestigators were reported to regulatoryagencies

Audit results are reported quarterly to the R&D RiskManagement & Compliance Board, and annually tothe GSK Audit Committee. Any concerns or issuesidentified during audits are fully investigated andappropriate action taken. This may includeretraining or, in severe cases, dismissal for theindividuals concerned as well as development ofnew training programmes or procedures to preventa reoccurrence. Trial data may also be re-analysed.

http://www.gsk.com/responsibility/cr_issues/ct_trials_developing.htm



Inspections of investigators, clinical researchorganisations, Independent Ethics Committees/Institutional Review Boards and sponsors of clinicaltrials are also carried out by regulatory authorities toensure the safety of trial participants, the quality ofdata, and that trials are conducted according toGCP. During 2006 there were more than 30 suchinspections of GSK and investigators used by GSKto conduct clinical studies.

CLINICAL TRIAL INFORMATIONAND RESULTSWe make the results of our clinical trials widelyavailable to healthcare practitioners and others whouse or evaluate the use of our medicines. We alsopublicly disclose information about ongoing trials.

Ongoing clinical trialsPublicly available internet-based registration ofongoing clinical trials can provide a stimulus forincreased participation in clinical research. It alsoprovides an important reference point so interestedparties can track the subsequent disclosure of clinicaltrial results.

GSK is legally required to post summary protocolinformation for ongoing studies of treatments forserious or life-threatening diseases conducted undera US Investigational New Drug Application on theNational Institutes of Health websitewww.ClinicalTrials.gov.

In addition, GSK is posting protocol summaries of allclinical trials, irrespective of the countries involved,to ClinicalTrials.gov.

At the end of 2006 there were 223 protocolsummaries of actively recruiting clinical trials onClinicalTrials.gov. These meet the requirements ofsuch postings as set out by the InternationalCommittee of Medical Journal editors. For non-phase III trials, our policy is to delay the posting onthe website of certain data elements on anexceptional basis when they are competitivelysensitive.

Clinical trial results Pharmaceutical companies are legally required todisclose all relevant data from clinical trials to theappropriate regulatory authorities when seekingapproval for a new product.

After approval, sponsors have a continuingobligation to provide regulatory authorities withupdated safety information from clinical trials, seepatient safety. Safety and efficacy information isprovided to doctors through prescribing informationwhich is approved by regulators.

In addition there is a need to use other ways tocommunicate the results of our clinical trials tohealthcare practitioners and others who use orevaluate the use of our medicines.

GSK follows the PhRMA Principles on theConduct of Clinical Trials and theCommunication of Clinical Trial Results and iscommitted to timely communication of results forall products approved for marketing. Whereverpossible we publish our trial results in peer-reviewedscientific and medical journals, or in conferenceabstracts and proceedings. These are used byresearch and healthcare communities to obtain thelatest information on treatments.

GSK cannot guarantee publication by thesemethods since this is at the discretion of journaleditors and conference organisers. For this reason,we launched the GSK online Clinical Trial Registerin 2004, to supplement prescribing information andpublications in the scientific literature.

The Register contains results and protocolinformation from GSK-sponsored trials of marketedmedicines. It also provides references to publicationsthat have appeared in medical journals. Anyone canuse the internet to access the register.

Activity in 2006At the end of 2006 there were 2,760 clinical trialsummaries on the GSK Clinical Trial Register(http://ctr.gsk.co.uk/welcome.asp). This includesall clinical trials of our major marketed productswhich have been completed since the formation ofGSK in 2000, or that were completed before thisand are likely to inform medical judgement.

We have continued to populate the register withclinical trials that relate to our other marketedmedicines and this was largely completed in 2006.

Number of summaries of GSK clinical trials onthe GSK Clinical Trial Register (cumulative total)

Year Summaries

2004 143

2005 2,125

2006 2,760

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Our approach to authorship ofjournal articlesThere have been concerns about“ghost writing” of journalarticles, where doctors put theirnames to articles written bypharmaceutical companies. GSK’spolicy is that:

• Authorship andacknowledgements for articlesmust be consistent withjournal guidelines and bedetermined on the level ofcontribution to study design,data acquisition, analysis andinterpretation and writing orrevising the manuscript.

• The named senior author for apaper must activelyparticipate in the draftingprocess, lead the contentdevelopment, and retain finalapproval authority for themanuscript.

• Any GSK staff or contractorswho contribute to thedevelopment of manuscriptsfor external authors must benamed in the article.

Read our Public Policy onDisclosure of Clinical TrialInformation Authorship ofJournal Articles.

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((ccuummuullaattiivvee ttoottaall))

www.clinicaltrials.gov

http://www.phrma.org/updated_principles_for_conduct_of_clinical_trials_and_communication_of_clinical_trial_results/

http://ctr.gsk.co.uk/welcome.asp

http://ctr.gsk.co.uk/welcome.asp

http://www.gsk.com/responsibility/downloads/GSK-Public-Policy-on-Disclosure-of-Clinical-Trial-Information.pdf



Our objective is to disclose on the Clinical TrialRegister the trial results for all new products within10 months of the product reaching the market andto disclose the results of trials completed after aproduct is approved for marketing within one yearof trial completion. In 2006 a small number ofpostings were delayed for various reasons, includingso that publication in scientific journals was notjeopardised.

An independent assessment of documentationprocesses and procedures used by GSK inpopulating the Clinical Trial Register has beenconducted by an external organisation. We willcontinue to engage the services of this organisationto ensure that GSK complies with the policies andprocedures that we have established to fulfil ourcommitment to make information from our clinicalresearch activities available to the public.

PATIENT SAFETYEnsuring patient safety is extremely important andwe take the safety of all our medicines, vaccines andmedical devices very seriously.

Safety of medicinesMedicines are a part of modern life. In an idealworld, a medicine would target only the disease ordisorder it’s meant to and never do anything else.Unfortunately, despite the best efforts of scientists,such a medicine does not yet exist.

All medicines have potential risks as well as benefitsalthough not everyone who takes a medicine willexperience side effects. It is important that weidentify, evaluate and minimise safety concerns toensure that the overall benefits of a medicineoutweigh any risks. This is known aspharmacovigilance.

Monitoring the safety of medicines The pharmaceutical industry has two major roles inmanaging the safety of medicines:

1. To collect, investigate and proactively evaluateinformation relating to side effects of medicinesfor the purpose of protecting patients andadvising on drug safety

2. To fulfil its legal obligations to the regulatoryauthorities by reporting individual adverseevents (AEs) on an expedited basis and/orperiodically, according to the drug safetyregulations of each country

We strive to ensure patient interest is served throughthe prompt detection of a potential safety issue withone of our drugs so that appropriate communi-cation with regulators occurs. Following evaluation,decisions can then be made and action taken. Seecollecting and reporting safety data.

How do we monitor safety?An efficient, fully operational, worldwide system forpharmacovigilance is maintained within ourcompany. We have dedicated teams of scientistsand healthcare professionals across the world whomonitor, review, evaluate and communicate safetyissues with our medicines.

The safety of our products is assessed in clinicaltrials before a product can be approved formarketing. Sometimes adverse events occur afterapproval when a product is being used by largenumbers of patients. We have policies and agovernance framework in place to help us detectand act on any adverse events reasonablyassociated with our products. See drug safetygovernance framework.

Adverse events are recorded on our global safetydatabase and clinical trial database and investigatedby our clinical and pharmacovigilance teams. Thishelps us to monitor the balance between benefitsand risks. See benefit-risk management.

When appropriate, we respond to safety issues bychanging product labelling and communicatingwith doctors. In most cases these actions aresufficient; in a small number of cases we conductrisk minimisation activities, such as further clinicaltrials. In certain cases it may also be appropriate tostop clinical trials or to withdraw the medicine fromthe market. See collecting and reporting safetydata.

GSK is investing in a number of areas of emergingscience that have the potential to improve patientsafety, for example, pharmacogenetic research, seesidebar.

Enhancing the pharmacovigilance systemThe science of pharmacogivilance is continuallyevolving, providing new ways of enhancing thepharmacovigilance framework to the benefit ofindustry, regulators, healthcare professionals andmost importantly patients. To enhancepharmacovigilance GSK recommends that:

• Initiatives are undertaken to increase thequantity and quality of the reporting of possibleside effects of medicines by healthcareprofessionals and patients

• There is a focus on the development ofelectronic patient records which would permit“real time” access to anonymised data for thedetection and evaluation of possible side effects

• Pregnancy registries are established by healthcare systems to enable the rapid collection andevaluation of data related to possible adverseevents, including birth defects

• Research is undertaken to establish the mosteffective ways to minimise the risks of medicinesincluding effective ways of communicating thebenefits and risks of medicines to healthcareprofessionals and patients

Genetic research and patientsafety Pharmacogenetic research is thestudy of genetic variations thatpredispose individuals to responddifferently to medicines. It is aresearch area with the potential to improve the effectiveness ofmedicines and patient safety, byidentifying which patients aremore likely to benefit from amedicine and which may besusceptible to side-effects.

Pharmacogenetics relies onanalysing the DNA of participantsin clinical trials against the resultsfrom their treatment. We collectblood samples for potential DNAanalysis in the majority of our phase I, II and III drugdevelopment trials. This includeswith ethics committee reviews andapproval and informed patientconsent.

http://www.gsk.com/responsibility/cr_issues/ps_drug_safety_gov.htm

http://www.gsk.com/responsibility/cr_issues/ps_benefit_risk_man.htm

http://www.gsk.com/responsibility/cr_issues/ps_coll_rep_safety_data.htm

http://www.gsk.com/responsibility/cr_issues/ps_coll_rep_safety_data.htm



• There is increased harmonisation ofpharmacovigilance rules through the rapid andconsistent implementation of ICH guidelines bythe EU, US and Japan

• An EU Pharmacovigilance Regulation isintroduced to streamline and simplifypharmacovigilance reporting requirements inEurope

In order to achieve this it is necessary for the industryand regulators to work together. Safety monitoringis not considered to be a competitive area, since itbenefits all parties if carried out to the higheststandards. GSK makes new ideas and technologyavailable to other pharmaceutical companies andregulators by presenting at scientific conferencesand also by working with third party softwaresuppliers to make new advances accessible to all.



Patients, consumers, doctors and governmentswant to use medicines from companies thatthey trust. Our reputation with these

stakeholders is therefore critical to our business.Meeting high ethical standards enables us tomaintain their support and retain our ‘licence tooperate’. It also helps us to attract, retain andmotivate the best people.

Unethical conduct could have serious legal andfinancial consequences for the company. So ourethics programmes are also an important elementof risk management and good stewardship ofcorporate assets.

This section explains our approach to business andmarketing ethics and our progress in embedding anethical culture at GSK. It covers:

• GSK’s Code of Conduct and managementcertification on business ethics

• Marketing ethics, including our codes ofpractice and policy on direct-to-consumeradvertising

• Ethical training and awareness programmes

• Monitoring and compliance systems, includingchannels for reporting cases of misconduct

• Data on the number of employees dismissed ordisciplined for violating company policies

CODE OF CONDUCTOur Employee Guide to Business Conduct requiresall employees to act with integrity, comply with thelaw, avoid conflicts of interest and report anyviolations of the law or GSK’s policies or anyunethical behaviour. It provides guidance, includingspecific examples, on what constitutes acceptable orunacceptable behaviour.

Employees learn about our standards during theirinduction and can access the guide via the companyintranet.

Read our Code of Conduct and Employee Guideto Business Conduct.

Ethical conductGSK is committed to business practices that meet high standards of ethical and legalcompliance and to ensuring that our employees behave with honesty and integrity.

Getting this right requires a combination of effective systems and an ethical corporateculture, in which it is understood that everyone is required to conduct business with

honesty and integrity and in compliance with applicable legal requirements.

Management certification on business ethicsCommitment to our Code of Conduct is reinforcedby an annual management certification programmethat requires managers to confirm that they complywith our ethics policies. The programme covers over12,000 managers worldwide. Eligible managersfrom all business units completed the certification in2006.

Certification is managed electronically and non-certification is tracked and followed up. Non-certification is typically due to extended leave ofabsence, such as maternity leave or long-term sickleave.

The full certification statement is reproduced inthe background section of our website.

Business ethics and our suppliersWe expect our suppliers to operate to the same highethical standards as our own employees. SeeSupply chain page 50.

MARKETING ETHICSGSK markets its medicines to doctors, hospitals andgovernments. In some countries, such as the US,we also advertise medicines directly to consumers.

Our specialist sales representatives meet regularlywith doctors and pharmacists to inform them aboutour medicines and their approved uses.

We believe that sales representatives play animportant role in providing up-to-date informationto doctors on our products and their benefits topatients. However, we recognise that the marketingof pharmaceutical products raises some challengingissues.

In particular, some people are concerned thatmarketing by pharmaceutical companies exertsundue influence on doctors, that salesrepresentatives do not always give doctors fullinformation about potential side effects, or thatpromotion for unapproved uses may be commondespite increased training, monitoring andoversight.

Find out moreIn our report:

• Ethical issues in R&D,including our policies onrelationships with doctorsinvolved in clinical trials,disclosure of clinical trialresults and writing ofarticles for medicaljournals

• Our relationships withgovernments and patientgroups

• Supply chain standards

• Our access to medicinespolicies

On our website:

• More backgroundinformation on our ethicspolicies

• Our Code of Conduct

• Our European MarketingCode of Practice

http://www.gsk.com/responsibility/cr_report_2005/ethical-conduct/index.htm

http://www.gsk.com/responsibility/cr_report_2004/pc_marketing_code.htm


http://www.gsk.com/responsibility/cr_report_2005/ethical-conduct/code-conduct.htm






The promotion of pharmaceutical products is highlyregulated and several governments are extendinglegislation in this area. For instance, six US statesrequire pharmaceutical companies to restrict orreport their interactions with doctors. Requirementsvary from prohibiting companies from providingmeals to setting annual spending limits or requiringtransparent reporting. Similar legislation is beingconsidered in many other states. The AmericanMedical Association now enables doctors to requestthat their prescribing activity is not shared withpharmaceutical companies.

Our approach to addressing these issues includesthe following:

• All GSK employees must comply with ourmarketing codes of practice – revised andstrengthened in 2006 – and our policiesgoverning consumer advertising

• Sales and marketing employees receive trainingto ensure they have a good understanding ofour marketing policies and the legal frameworkgoverning their sales activities

• We have programmes to monitor complianceincluding, in some regions, feedback fromdoctors on our sales practices

Marketing codes of practiceOur Pharmaceutical Marketing and PromotionalActivity policy applies to all employees and agents.It commits us to promotional practices that areethical, responsible, principled and patient-centred.It prohibits kickbacks, bribery or other inducementsto doctors, and any promotion for unapproved usesof our medicines.

This policy is supported by regional marketingpractices codes in Europe, our International region,Japan and the US. These codes apply the sameethical standards but reflect differences in marketstructures, national healthcare systems andregulations. They incorporate the principles ofindustry codes of practice such as the EFPIA, IFPMA,JPMA, and PhRMA marketing codes.

Our codes are available in many languages andemployees can access them via the intranet.

A copy of the GSK European Promotion ofMedicines Code of Practice is available on ourwebsite.

Progress in 2006We revised our procedure for making charitabledonations to health-related organisations andfunding external science and medical programmesin all our regions. Decisions about these grants mustnow be made by relevant medical and/orcompliance personnel and not by sales andmarketing departments.

USWe strengthened our policy on Grants forIndependent Medical Education. All grants will nowbe made by the new Center for Medical Educationwithin our Corporate Ethics & Compliancedepartment. Grants to medical educationcompanies (MECs), hospitals, medical associations,and patient groups must not account for more than25 percent of that organisation’s annual budget.Sales staff are not permitted to deal with MECs orother providers of independent medical educationor to recommend speakers for educationprogrammes.

International regionWe revised the Marketing Code for ourinternational region to ensure it meets new IFPMAstandards and added a comprehensive Q&A to helpemployees understand our requirements. Weprovided more guidance to employees on the useof healthcare professionals as consultants andsponsorship of healthcare professionals to attendconferences.

EuropeWe updated the GSK European Promotion ofMedicines Code of Practice in March 2006 to ensurealignment with the updated EFPIA Code. The majorchanges include:

• New sections on distributing productinformation to healthcare professionals viaemail or the internet

• Prohibiting the use of competitions with prizesto promote our medicines

We established a new procedure on relationshipswith patient groups and committed to publishingGSK funding for these groups. See patientadvocacy on page 13.

R&DWe strengthened our R&D policy on gifts andentertainment. This policy states that the primarypurpose of a meeting must be to facilitatesubstantial discussion of a medical or scientific topic.Meals may be provided during such meetings onlyif they are incidental to the meeting. The meal mustbe modest in value and GSK personnel must bepresent.

Consumer advertisingThis section explains our approach to advertisingour prescription medicines in the US and ourconsumer healthcare products in other markets.

Direct-to-consumer advertisingIn the US we advertise our prescription medicines toconsumers through TV and print advertisements.This is known as direct-to-consumer (DTC)advertising. New Zealand, Bangladesh and Koreaalso allow limited DTC advertising. DTC advertisingof prescription medicines is not permitted in othermarkets.

Our Marketing Codes ofPractice in summary• Full and accurate information

– information can only beprovided on approved uses for a medicine. It must bebased on valid scientificevidence, and must beaccurate, balanced, fair,objective, unambiguous andup-to-date

• Promotional Items tohealthcare professionals –promotional items must begiven only occasionally andmust be relevant to thepractice of medicine. Theirnominal value must be nomore than $10 (less than £6).Items cannot be made as aninducement to prescribe anyof our medicines or to medicalprofessionals retained asconsultants to GSK

• Appropriate hospitality formeetings – no entertainmentis permitted. Hospitality (suchas travel costs or food) mayonly be provided for meetingswith an educational purpose.The level of hospitality mustbe appropriate to theoccasion and must only be provided for relevanthealthcare professionals, not spouses, children, officepersonnel, or any otherguests. Travel costs are notprovided in the US

• Decisions about grants formedical education arereviewed by qualified medicalor scientific personnel withinour compliance function

http://www.gsk.com/responsibility/cr_issues/downloads/gsk-pharma-europe.pdf



Supporting industry codes of conductGSK supports efforts tostrengthen marketing standardsacross the pharmaceuticalindustry. In 2006 this included:

Global – We helped revise theInternational Federation ofPharmaceutical Manufacturersand Association’s (IFPMA) Codeof Pharmaceutical MarketingPractices. GSK is a member of the newly formed CodeCompliance Network that willsupport implementation of theIFPMA standards throughtraining and education. GSKhelped revise the EuropeanFederation of PharmaceuticalIndustries Associations (EFPIA)Code of Practice for Promotionof Medicines

Greece – GSK Greece is leadingthe local industry body workinggroup set up to improve theirlocal code of practice

Korea – GSK led efforts toimprove the Korean Research-based Pharmaceutical IndustryAssociation’s Code of Conductand to have this endorsed by the Korea Fair Trade Commission

Japan – GSK joined the ExecutiveSteering Committee of the FairTrade Council of the EthicalPharmaceutical DrugManufacturing Industry thatseeks to strengthen compliancewith marketing codes

Slovakia – GSK’s GeneralManager in Slovakia helpedfound the recently formed localindustry association and nowleads this group

Sri Lanka – GSK led efforts tocreate the first marketing codefor the Sri Lanka Chamber of thePharmaceutical Industry basedon the IFPMA Code

In the US, we implemented a policy incorporatingthe new PhRMA Guiding Principles on DTCadvertising for prescription medicines. This statesthat DTC advertising should:

• Only begin after we have spent an appropriateamount of time educating doctors andhealthcare professionals about new medicines

• Be designed to educate consumers about themedicine and the condition for which it isprescribed

• Be accurate and supported by evidence

• Include information on the risks and benefits oftreatments

• Provide information on other treatment options(such as diet and lifestyle changes), where theseare referenced in the prescribing informationfor a product.

‘Reminder’ advertisements – short advertisementsthat mention the pharmaceutical brand name butnot the medical condition it is designed to treat – arenot permitted.

All DTC television advertisements (including audioand visual components) are submitted to the USFood and Drug Administration (FDA) for review atleast 30 days in advance. No problems with GSKDTC advertising were identified by the FDA during2006.

Members of the public and healthcare professionalscan send comments on DTC advertising to PhRMA’sOffice of Accountability established in 2006. Theseare forwarded to the relevant company. The Officeof Accountability reports periodically on thecomments and the companies’ response to theFDA. In 2006, GSK did not receive any commentsfrom the Office of Accountability regarding its DTCadvertising.

In 2006, our employees involved in DTC marketingattended training on our new policy and the PhRMAPrinciples. We also developed a DTC e-Learningmodule for future training.

Disease awareness campaignsWe fund disease awareness campaigns which aredesigned to increase understanding of a specificdisease but are not linked to the promotion of GSKproducts. We revised our policies in 2006 to makeclear that disease awareness campaigns must notimply endorsement by a government agency,professional body or patient advocacy groupwithout consent. Campaigns cannot include linksto third party websites without permission or to anywebsites which contain information about uses ofour products outside of their licence.

Non-prescription productsWe advertise over-the-counter medicines, oralhealthcare and nutritional products directly toconsumers. This is governed by national regulationsor codes of practice for advertising. These aregenerally less stringent than the requirements forprescription medicines.

We belong to the Consumer Healthcare ProductsAssociation in the US and comply with its Code ofAdvertising Practices for Non-prescriptionMedicines. This states that advertising should notimply a casual attitude towards using medicines orsuggest that an over-the-counter medicine canprevent or cure a serious disease that must betreated by a licensed practitioner. In addition GSKpolicies require that all claims in advertisements areconsistent with product labelling. Advertising thatcompares a GSK product to a competitor’s must besupported by adequate data.

GSK Consumer Healthcare advertising is reviewedby Copy Review Committees (in our larger markets)or medical and legal personnel (in our smallermarkets) before publication to ensure it meets ourstandards.

Our over-the-counter medicines are also promotedto pharmacists, doctors and dentists by our salesteams. In 2006 a prescription weight loss medicinewas promoted in preparation for its approval as anover-the-counter medicine. Our US ConsumerHealthcare medical sales team completed onlinetraining on our Marketing Codes of Practice prior topromoting this product.

Advertising to childrenOur guidelines for advertising to children meet orexceed local laws and codes of practice. Theyprohibit advertising designed to appeal to, ortargeted at, children below the legally mandatedminimum age. For example, in the UK we do notbuy advertising space in children’s media and we donot supply vending machines to primary schools.

Sports star sponsorship is important to brands suchas Lucozade Sport. Our guidelines state that onlypeople who set an appropriate example should beused for sponsorship, and they should have anappeal that is not solely to children below the ageof 13.



TRAINING AND AWARENESSTraining and awareness programmes helpemployees understand and comply with our ethicspolicies.

In our global leadership survey, over 91 percent ofmanagers said they believe that people in theirdepartment show commitment to performancewith integrity.

Specialised training is provided for employeesworking in R&D, manufacturing and sales andmarketing where there are additional regulatoryrequirements.

We monitor the success of our training throughregular employee surveys. In 2006 we surveyed ourUS district sales managers (DSMs) who play animportant role in helping sales representativesresolve compliance questions. This showed that asubstantial majority of DSMs have a goodunderstanding of compliance issues and areconfident that they can help representatives resolve‘grey’ areas. The survey identified opportunities toenhance our training and resource materials. Forinstance, we will provide managers with additionaltraining and materials to increase their expertise andfor providing more effective guidance to their staff.

Ethics trainingNew employees in the UK and the US completeinduction training on our Code of Conduct. Thisensures that they understand the importance ofethical conduct from day one, know how to dealwith dilemmas and where to seek help.

We ran an Ethical Decision Making workshop formanagers as part of our ‘Hot Topics’ trainingprogramme. Follow up emails were sent toencourage managers to review the key points withtheir teams. We piloted three e-Learning moduleson ethical leadership within our Corporate HR andCorporate Ethics and Compliance teams before theyare rolled out to all managers worldwide during2007.

Training and awareness for sales andmarketingEmployees working in sales and marketing receiveextensive training on ethics and our marketingpolicies. This includes:

• Induction training for new employees on ourmarketing codes of practice

• Sales employees are required to pass a test onour marketing code before starting their salesrole

• Detailed training for sales representatives on themedicines they promote and the diseases theyare designed to treat

• Regular refresher courses held at least once ayear

• A yearly bulletin on the major types of unethicalconduct detected and the actions taken, foremployees in the US

• Senior managers within our European regionreceive a quarterly update on the number andtypes of disciplinary actions for policy breaches

USIn 2006, all new sales and marketing staff in the UScompleted training and more than 9,000 existingstaff received two hours of annual refresher training.

In the US, compliance is a formal performanceobjective for sales and marketing employees. Theyare appraised against the following objective:

“Consistently follow company policies andprocedures, take and complete required compliancetraining in a timely manner, and report complianceissues to manager, Legal or Compliance.”

In addition, managers are evaluated against thefollowing objective:

“Ensure that supervised employees are trained oncompany policies and procedures and have taken allrequired training, and provide oversight anddirection to supervised employees so that they arein compliance with company policies andprocedures.”

We will launch a Compliance University in 2007 forUS sales managers. This is a one day programmedesigned to improve understanding of our policiesand the ability of managers to guide staff, reducethe number of breaches of our policies, and increasemanagers’ expertise in detecting compliance issuesso that corrective actions can be taken early.

InternationalIn 2006, all sales and marketing staff continued toreceive training in the Pharmaceuticals InternationalPromotion and Marketing Code. This involves initialawareness sessions at induction courses and regularreminders and refreshers, facilitated by medical staff,at sales conferences.

In addition a number of supplemental policies wereimplemented in 2006 and these have been addedto an internal intranet community which supportsvisibility by all International staff. Training of salesand marketing staff will be delivered in the first halfof 2007 regarding the updated International Code.

EuropeAll pharmaceuticals sales and marketing staff inEurope were trained in the updated Promotion ofMedicines Code of Practice and certified that theyunderstood the revised Code.

Ethics training for R&D We updated our ‘Performance with Integrity’ face-to-face induction training for R&D employees whichwas completed by over 11,500 new and existingemployees worldwide in 2006. This mandatorycourse – offered in 12 languages – includes trainingon the Code of Conduct, conflicts of interest,acceptance of gifts and entertainment byemployees and external professional activities.

Our view on direct-to-consumeradvertisingPromoting the use of prescrip-tion medicines directly toconsumers can be controversial.Critics believe that it encouragespeople to request unnecessarytreatment, adding to the burdenon healthcare systems.

We believe that responsiblepharmaceutical advertising is a useful source of healthinformation for patients. It helps to increase knowledge of conditions and educatespatients about treatmentoptions.

In countries such as the USwhere DTC advertising iscommon industry practice, weneed to ensure that our productsare also promoted in this way. If we do not, GSK would be at adisadvantage against ourcompetitors.

Patients must still consult withtheir physicians about theircondition, the appropriatenessof a prescription medicine, andobtain his or her consent beforereceiving such medicines.



We launched additional training for R&D employeeson our policies governing;

• Collection, use and storage of protectedmedical information (information held onclinical trial participants relating to their healthstatus and medical conditions)

• Collection and use of human biologicalsamples, data integrity management of humansafety information

• Public disclosure of clinical trial results

• Post-trial treatment for participants in GSK-sponsored clinical trials

Ethics training in practiceEthics training is designed to help employees applyour policies in real life situations and make the rightdecisions in their work.

For example, employees are encouraged to askthemselves the following questions before makinga decision:

• Would I be embarrassed if my friends or familyknew what decision I have made?

• How would my decision look to a cynic?

• What could the newspaper headline look like?

• Am I still confident that this is the right decisionfor GSK?

During training employees explore ethical dilemmasthey may face in their work and receive guidance tohelp them understand the appropriate response.This is one example from a recent training session:

Scenario: you are at a trade conference and putyour business card in a prize draw. You win thegrand prize, which is a set of golf clubs worth£1,000. You enjoy golf and would like a new set ofclubs. The draw is sponsored by an exhibitor withwhom GSK does business. Should you keep theclubs?

Guidance: taking into account the GSK policy,acceptance of entertainment and gifts by GSKemployees, the clubs must not be accepted and itwould be better not to put your business card inthe draw.

Objectives for 2007• Translate 20 key policies and the Employee

Guide to Business Conduct into 12 languagesto improve understanding across the business

• Create company wide compliance training onour Employee Guide to Business Conduct tosupplement local training and to reinforce ourannual Management Certification in BusinessEthics

MONITORING ANDCOMPLIANCEWe recognise that strong policies, codes of practice,and good training do not guarantee that allemployees will meet our standards. Our internalcompliance systems are designed to identify andaddress breaches of our codes.

This section covers:

• The role of our Corporate Ethics andCompliance department

• Channels for employees to report concerns orsuspected cases of misconduct

• How we address misconduct

• The number of employees dismissed ordisciplined for misconduct

Corporate ethics and compliance functionOur corporate ethics and compliance departmentpromotes effective compliance programmes,addresses compliance issues, and reports problemsand progress to senior management and the Board.

We have a dedicated compliance officer in each ofour eight business units – R&D, Manufacturing,Biologicals, Pharma Europe, International Pharma,Consumer Healthcare, Japan Pharma and USPharma, in addition to the corporate complianceofficer, who reports directly to the CEO.

Compliance officers are senior managers with directaccess to the leadership teams of GSK functions.They are a source of expertise for anyone with aquestion on ethics or GSK policies. In our Europeanand International regions they are supported by anetwork of regional and country compliance officersand local compliance champions. We will furtherstrengthen these networks in 2007, particularly ineastern Europe.

Sales representatives are supervised by theirmanagers who regularly monitor educationalevents, visits to doctors and expenses. We also haveindependent monitors to review records in anumber of key risk areas in the US. Our internalaudit department regularly audits our sales andmarketing practices globally.

GSK requires each business or functional unit toidentify all significant risks, implement effectivecontrols to manage those risks, periodically reviewthose risks and provide upward communication ofany significant issues that arise.

USIn the US we have four sales and marketingcompliance advisers who provide feedback oninfractions, conduct customised training andrecommend process improvements. They are animportant link between our compliance departmentand commercial units. Our compliance data analysisand reporting function coordinates monitoring,reporting and targeting of our compliance efforts.




In 2006 we set up a Strategic Tracking, Analysis &Reporting (STAR) System. This gives senior managersaccess to comprehensive compliance informationand makes it easier to identify instances of non-compliance in their area and take appropriateaction.

EuropeThe European Code of Marketing Practice includesa quarterly reporting mechanism where the marketsconfirm whether any breaches of the code ofpractice have occurred, the severity of any breachesand what actions have been taken to preventrecurrence. These reports are reviewed by seniormanagers. Expenses and payments to doctors (forexample for speaker fees) are monitored locally anda summary report for each market is reviewed byour european compliance officer each quarter.

InternationalWe established a monthly review system in ourInternational region. During 2006 senior managersreviewed and resolved a number of complianceissues through this mechanism. Many other minorissues were resolved at a local level.

Reporting channelsEmployees are encouraged to seek help and toreport any concerns or suspected cases ofmisconduct. They can do this through their linemanagement, a compliance officer, or through ourconfidential Integrity Helplines or offsite post officebox (in the US).

Reporting channels are promoted through theEmployee Guide to Business Conduct, on the GSKintranet and during training.

In 2006 there were:

• 5,363 contacts with the compliance functions.This is an increase from 3,644 in 2005, and2,593 in 2004

• Of these, 81percent were from employeesseeking advice or information; 19 percent werefrom employees reporting suspected cases ofmisconduct

The compliance group continues to make efforts topromote high standards of legal compliance andethical behaviour, as well as the use of the IntegrityHelpline as a compliance resource. The year-on-yeargrowth (41 percent in 2005; 47 percent in 2006)seen in the contact figures above may be due to agreater awareness and sensitivity to these standards.

Doctors can raise any concerns or report unethicalconduct by GSK sales representatives through ourcustomer response centres, during our marketresearch or via industry associations such as PhRMAand the ABPI. Staff are trained to deal with concernsabout marketing practices that might be raised byhealthcare professionals, patients or the public. Theyredirect calls to appropriate senior management ora compliance officer if necessary.

Addressing misconductOur Corporate Ethics and Compliance departmentmonitors and tracks allegations and suspected casesof legal, ethical or policy infractions. It ensures thatall such allegations are appropriately investigated.Disciplinary action, up to and including dismissal, istaken where necessary.

Our discipline reporting process was changed in2006 in order to provide GSK with the ability tobetter identify issues resulting in formal HRdisciplinary action. Significant changes include: newcategory sections; more precise reporting directions;and interactive training sessions conducted withappropriate personnel. Because of theseimprovements, the information for 2006 policydiscipline cases differs from the informationreported in previous years. The overall level ofdismissals collected is similar to previous years, butis not directly comparable. In future reports, GSKwill be using 2006 HR policy discipline numbers asthe baseline against which to compare policydiscipline trends.

In 2006:

• 1,089 employees were disciplined for policyviolations

• Of these, 284 were dismissed or agreed to leavethe company voluntarily (known as separation)

• Other disciplinary actions included documentedwarnings (805 instances) and financial penalties

• Employees staying with the company receivedretraining and increased monitoring

The 1,089 disciplinary actions included 381 cases ofemployees breaching sales and marketing codes.These 381 cases resulted in 49 dismissals orseparations from the company. All the other 332 cases resulted in documented warnings.

We will these data to analyse compliance trends andregional differences, and to identify appropriatecorrective actions.



GSK employs over 100,000 people in 116 countries. Our goal is to be a companywhere talented people apply their energy

and passion to make a difference in the world.Competitive reward is important but not the onlyfactor that influences our ability to recruit and retaintalented employees.

This section explains our approach to employmentand our performance in 2006 including:

• Initiatives to increase diversity and inclusion

• Training, development and talent management

• Internal communication – how we communi-cate with employees and get their feedback

• Flexible working arrangements, wellbeing andresilience programmes that support a healthyworkforce

Breakdown of global employment by business (endDecember 2006):

Employment practicesOur goal ‘to be the best place for the best people to do their best work’ is central to our

business strategy and underpins our success. Our people are our greatest source ofcompetitive advantage. Their skills and intellect are essential to GSK discovering and

delivering the best new medicines and vaccines, and successfully marketing and sellingour prescription and consumer healthcare products.

GSK SPIRITWe expect employees to meet high standards in theway they carry out their work for GSK. The GSKSpirit defines our culture and the principles weexpect employees to work by. These include:

• Performance with integrity

• Innovation and entrepreneurial spirit

• Accountability for achievement

• Passion and a sense of urgency

• Continuous learning and development

Regular performance appraisals assess whetheremployees have upheld these principles and therequirements of our Code of Conduct in their work(see Ethical Conduct for more on our Code). Theresults affect bonuses and career progression.

EMPLOYEE SURVEYSRegular employee surveys help us to monitor GSK’sculture, gauge employee satisfaction and assess theeffectiveness of our employment policies.

Our Global Leadership Survey (GLS) is sent to GSKmanagers every two years and is available in ninelanguages. In 2006, over 10,000 managers tookpart, a 78 percent response rate. The survey trackedtheir views against our previous two surveys andagainst findings from other global companiesthrough a cross-company database. This databaseincludes 42 top-ranked companies from severalindustries including pharmaceuticals, automotive,banking, energy and IT. The normative database hasresponses from around three million employees in139 countries.

Some of the employmentawards won by GSK in 2006• Working Mother’s Top 100

Best Places to Work in the US

• Britain’s Top Employers 2007,independent survey run byCorporate ResearchFoundation and the Guardiannewspaper – ranked 4th

• Britain’s Most AdmiredCompanies 2006,Management Today – ranked4th

• Best Companies to Work for Awards in Germany;Hungary; Ireland; Mexico andRussia

• Human Rights Campaign’sBest Places to Work for Gay,Lesbian, Bisexual andTransgender Employees – GSKreceived a perfect score

Business or Number of function employees

Maufacturing 33,235

Selling 44,484

R&D 15,952

Adminisration 9,024

Total 102,695



Key survey findingsThe survey showed that managers in GSK are moresatisfied with their company than managers in theother companies that took part. GSK participantswere also more satisfied than they were in 2004,with overall responses on average 4 percent higher.

Improvement plansSurvey results are reviewed by our corporateexecutive team which has identified two key areasof focus

• Reducing unnecessary bureaucracy within andacross our businesses

• Leadership visibility, defined as the drive formanagers to spend more time with their teamsand to be more visible in their respectivebusinesses

Each business unit and function has developed anaction plan to address these and other areas forimprovement.

DIVERSITY AND INCLUSIONWe aim to create an inclusive working environmentat GSK where employees from diverse backgroundscan flourish.

Diversity benefits our business. A workforce withdiverse backgrounds, cultures and outlooks helpsus to better understand the needs of differentpatients and customers. Only by delivering genuineequality of opportunity can we be sure that we havethe best people in the right jobs.

We reinforce our commitment to diversity andinclusion (D&I) through:

• Our corporate executive team which endorsesa global policy for D&I and support activities andinitiatives such as the annual MulticulturalMarketing and Diversity Awards

• Our company-wide D&I policy and practices areavailable to view by employees through ourintranet

• Monitoring and reporting data on genderdiversity by management grade worldwide andon ethnicity in the US and UK

Industry 2006 GSK 2006 (%) GSK 2004 (%) GSK 2002 (%)Benchmark Favourable Favourable Favourable

Overall satisfaction with GSK 65 85 73 67

People in my department show commitment to performance with integrity N/A 91 91 88

I am proud to be part of GSK 84 90 83 78

People in my department are committed and enabled to make meaningful contributions N/A 84 82 76

I can report unethical practices without fear of reprisal 68 82 76 70

The amount of work I am expected to do is about right 53 42 45 42

GSK is a company where great people can do their best work N/A 62 52 46

I am satisfied with the recognition I receive for doing a good job 54 59 57 56

Sufficient effort is made to get the opinions and thinking of people who work here 55 65 59 51

Leaders in my department act as teachers, coaches and champions of development N/A 60 59 54

I receive ongoing feedback that helps me improve my performance 54 61 61 57



• Reinforcing the GSK Spirit which states that wewill value and draw on the differing knowledge,perspectives, experiences and styles resident inour global community

• D&I steering teams in the UK and US that runawareness campaigns and training foremployees

• Diversity champions in each business unit andamong our field staff

• Employee networks that provide insight andsupport for diversity objectives

More background information on our approach toD&I is available on our website.

In the US we conduct an annual survey of 1,000 employees selected at random to gaugeprogress on inclusion and resilience. In the 2006survey where we achieved a 41 percent responserate, 76 percent agreed that ‘my workgroup has aclimate in which diverse perspectives are valued’ and79 percent agreed that ‘my manager demonstratesthe ability to manage a diverse workforce.’

Gender diversity

* Corporate Executive Team, Senior Vice Presidents,Vice Presidents

** Director grade*** Manager grade

This positive trend of increased femalerepresentation in management positions reflects theimpact of GSK’s D&I strategy across the businessesand the effect of our flexible working policies inattracting and retaining women. This is furthersupported by the 2006 US D&I survey where 79 percent of employees agreed that ‘my managerenables flexible and innovative solutions formanaging work and personal life’.

For more than 12 years, the annual Women inScience event in the US has fostered positive,mentoring relationships between GSK femalescientists and female students aspiring to enterscience fields. It also exposes students to hands-on,real-life laboratory and research environments andfurther enhances GSK’s ability to attract and retainwomen in the fields of science.

Gender diversity in management 2006 (worldwide)

Women in % of positions management grades held by women

2006 2005 2004 2003

A&B Bands* 22 21 19 20

C01 – C03** 34 33 33 31

C04 – C05*** 39 38 38 37

Total for all management grades 36 35 35 34

Ethnic diversityIn the US, minorities (defined as Blacks, Hispanics,Asians, Pacific Islanders, American Indians andAlaskan natives) made up 19.8 percent of ourworkforce, compared with 19.6 percent in 2005and 19.5 percent in 2004. This is above the averagein our closest comparator, the US chemical industry.

In the UK, ethnic minorities, as defined by the UKCommission for Racial Equality (CRE), accounted for18.3 percent of employees (compared with 16.8percent in 2005 and 15.5 percent in 2004). The CREdefines ethnic minorities as anyone not identifyingthemselves as ‘White British’. Figures from the 2001census show that 12.5 percent of the population ofEngland and Wales were from an ethnic minority.

An alternative measure of diversity is the numberof employees who define themselves as ‘non-white’. In 2006 11.6 percent of GSK UK employeesdefined themselves as non-white (compared to 11.0 percent in 2005 and 10.4 percent in 2004).

Age In advance of new age discrimination regulations inthe UK, we carried out a comprehensive review ofour policies and practices and consulted our UKInformation and Consultation Forum. As a result anumber of policies were amended and updated.Extensive training was provided for HR professionalsand the changes were communicated to managersand employees to ensure they understand theimplications of the new law.

18.3%

% UK ethnic minorities

19.8%19.8%

% US minority% US minority

http://www.gsk.com/responsibility/cr_report_2005/employees/diversity.htm



DisabilityWe are committed to offering people withdisabilities access to the full range of recruitmentand career opportunities at GSK. In the UK we wereawarded the two ticks symbol from Jobcentre Plusand we partner with the Employers Forum onDisability and other interest groups to ensure we area Disability Confident organisation.

Multicultural Marketing and DiversityAwardsOur annual Multi-Cultural Marketing and DiversityAwards (now in their fifth year) inspire staff to findcreative ways to reach a wider audience ofemployees, customers and communities.

Awards are given in several categories includingEmployee Attraction, Development or Retention,Multicultural Marketing and Sales, CommunityOutreach and Diversity Ambassador. There havebeen 289 entries to the awards since 2001 and 21employees have received the GSK DiversityAmbassador Award for leading diversity efforts withpassion, innovation, and impact.

Employee networksEmployee networks are an integral part of our D&Iprogramme. Networks support professional growthfor participating employees and provide a forum foremployees with similar backgrounds to meet anddiscuss issues of shared concern.

Several networks have a particular diversity focus,including our networks for Asian, African American,Hispanic, Gay, Lesbian, Bisexual or Transgenderemployees. As well as benefiting the participants,the networks act as a source of expertise on diversityissues for other people at GSK.

Each employee network has an executive sponsorwho helps in setting and achieving goals, obtainingresources, and promoting network objectivesamong senior management. GSK-sponsorednetworks, regardless of affiliation, are open to allGSK employees.

EMPLOYEE DEVELOPMENTAND TALENT MANAGEMENTGSK invests in training and development to enableall employees to perform to the best of their abilityand to support their career progression. We workhard to attract and retain the best and the brightestpeople at GSK and to help them develop theirpotential.

TrainingWe provide job-related training courses for allemployees and leadership training for managers.

Employees can enrol in training programmesthrough our myLearning intranet site available inthe UK, US and other countries. During 2006, weregistered on the system over 638,000 coursecompletions.

Leadership training in 2006 included:

• 108 managers attended four Leadership Edgeprogrammes

• 77 managers attended six InspirationalLeadership Workshops that focused on inspiringand motivating people to high performance

• 407 managers attended new manager /experienced manager training

• 692 managers attended ‘Hot Topics –Harnessing the Power of Real Conversations’

• 678 managers attended ‘Hot Topics – The Artof Self Leadership’

DevelopmentRegular performance appraisals reward strongperformance, identify training needs and helpemployees set objectives that are aligned with ourbusiness priorities. More than two-thirds of GSKemployees receive an annual performance appraisalthrough our Performance and DevelopmentPlanning (PDP) programmes.

PDP includes an assessment of how well employeeshave implemented the GSK Spirit – the principleswe use to define our culture. It can have an impacton bonus payments and affect future careerdevelopment.

Employee turnoverWe have a number of teams that focus on issuesaffecting employee retention, for example themanagement of people in different age groups anddevelopment and promotion for female andminority employees.

Rewarding strong performance Performance related pay and share ownershipschemes help us attract and retain the best peopleand generate a culture of ownership amongemployees. In countries where employee shareownership schemes exist the level of participation ishigh.

Talent managementOur talent management processes help us identifyand develop leadership candidates. We identify thehighest performing employees in each business andfunction through our annual talent managementcycle. Talented individuals take part in our leadershipprogrammes and are exposed to top managementthrough programmes such as the Chief ExecutiveForum.

http://www.jobcentreplus.gov.uk/JCP/Customers/HelpForDisabledPeople/DisabilitySymbol/index.html

http://www.employers-forum.co.uk/www/guests/events/prog/2006-2007/03/advanced-disability-confidence.html



INTERNAL COMMUNICATIONSGood internal communication is important inachieving our business objectives as well as creatingan open and inclusive work environment. We havea range of communications channels to keepemployees up to date with company news andenable them to give feedback.

These include:

• myGSK, our global intranet site, provides newsand updates and a Q&A section whereemployees can put questions directly to theCEO and senior executives. In 2006 JP Garnier,GSK‘s Chief Executive, answered 341 questionsfrom employees. Behind the News, a section ofthe GSK intranet, gives the company’s positionon important issues linked to press stories aboutGSK

• Web-broadcasts from GSK senior manage-ment, including 16 during 2006 from executiveteam members, for employees at our majorsites

• Spirit, our internal magazine, reaches around34,000 employees throughout the companyfour times a year. Many sites also produce localnewsletters

• Confidential feedback mechanisms enableemployees to raise concerns. These include ourIntegrity Helpline. See Ethical conduct

• Regular employee surveys, see page 40.

• 44 ‘townhall’ sessions during 2006 foremployees at all levels of the company werehosted by senior management. Employees havethe opportunity to discuss the progress of thebusiness, raise questions and give feedback.

We track the effectiveness of communicationsthrough employee surveys. We monitor thequestions employees put to senior managersthrough the Q&A pages on myGSK to ensure wepick up potential areas of concern. We also trackreadership of news stories on myGSK to helpimprove the relevance and interest of the content.

Employee consultationWe consult employees on changes that affect them.In Europe we discuss business developmentsthrough our European Employee ConsultationForum (EECF). In 2006 the EECF received updatesfrom GSK’s global business leaders and reviewedproposals and progress reports on a number ofEuropean initiatives in IT, distribution and medical.

We also have national consultation forums and in2006 we established a UK Information andConsultation Forum to provide information aboutthe company’s progress and plans and to helpstimulate constructive dialogue with employeerepresentatives within the UK. The Forum is madeup of 15 elected employee representatives andseven managers. It meets three times a year and, todate, has reviewed areas such as employment policychanges, UK pension arrangements andpreparations for supporting employees in the eventof a flu pandemic.

We have similar forums in other countries wherethis is national practice.

Communicating corporate responsibility It is through our employees that we put ourresponsible business policies into practice andcommunicate this to the outside world. Employeesare also important stakeholders in their own rightand want to know about our progress onresponsibility issues.

We keep employees informed about corporateresponsibility through regular news articles on theGSK intranet, through articles in Spirit magazine andby presentations to departmental groups. During2006, a summary of our CR report was distributedto 34,000 employees.

EMPLOYEE HEALTH Protection and promotion of the wellbeing of ouremployees is an ethical obligation and an importantcontributor to our goal to be an employer of choice.This philosophy also supports our business strategybecause a healthy and resilient workforce drivespositive business performance by increasingemployee productivity and attendance. Healthyworkers also reduce health care and insurance costs.

Healthy High PerformanceHealthy CultureWe consider four dimensions of health to be vitallyimportant to high performance: physical, emotional,mental and spiritual. People need to be physicallyenergised, emotionally connected, mentally focusedand ‘spiritually aligned’ (meaning they have a senseof purpose). Linked to these four dimensions are 16 factors that enable high performance. Thefactors range from fitness and nutrition to self-awareness and time management. We deliverprogrammes such as the Corporate Athlete and theHealth Risk Assessment (HRA) that are directed atimproving these 16 factors and measuring our riskreduction and health impacts.

Driving a healthy culture through all of GSK startswith the leadership. We want the company’s leadersto be committed to the continuous development oftheir physical and psychological well being so thatthey can be effective leaders and role models to theiremployees.

ResilienceWe use the term ‘resilience’ to describe the skillsand behaviours needed to be successful in a highlypressured environment. It is the same set of skillsthat helps to prevent work-related mental illness,which is a leading cause of ill-health leading to timeaway from work. Resilient employees can managework and home demands effectively and minimisethe adverse health affects of stress.



We identify and manage the challenges toemployee resilience and mental well being, inaccordance with GSK’s Global Resilience and MentalWell Being Standard. The majority of GSK sites haveprogrammes to reduce workplace pressures andhelp employees achieve a good work-life balance,such as time management training, flexible workingoptions and health awareness. Since 2002, work-related mental ill-health is down by 57 percent.

Our Team Resilience programme is now available in11 languages. It helps GSK teams to take control oftheir work and avoid excessive pressure which canlead to stress. The first step is to assess seven sourcesof pressure that can impact performance andhealth, and identify the extent of pressure the teamis facing. Team members then consider the issuesthat are creating excessive pressures and how theycan be managed more effectively. The objective isnot to avoid any pressure – which can help toachieve high performance – but to avoid becomingstrained or overwhelmed due to excessive workdemands.

By the end of 2006 more than 12,000 people fromover 1,000 teams had gone through the prog-ramme. The results show significant improvements.In the first two years of the programme:

• Reported pressure due to work/life conflicts fellby 25 percent

• Participating staff satisfaction increased by 21 percent

• 14 percent increase in willingness among staffto experiment with new work practices

• Teams that have taken the profile for a secondtime are showing improvement in the sevensources of pressure of between 30 percent and70 percent

We also provide a training programme to supportpersonal development and help individuals becomemore resilient. Pre- and post-assessments in a pilotof 500 employees found improvement in 55 of 58 elements measured, with the greatestimprovement in employees‘ sense of being relaxedand engaged. After two months the number ofpeople who felt less pressured rose by almost a fifth.

Personal healthOur programmes aim to improve the health ofemployees and their families, which benefits thebusiness through increased employee commitmentand productivity and reduced costs of ill-health.

Support includes on-site health and fitness centres,flexible working arrangements and family supportservices. Healthcare benefits focus on preventionand access to innovative and proven treatments. Forexample, in the US employees receive freeimmunisations, cancer screening, help with smokingcessation and regular check ups. We assistemployees suffering from chronic diseases with theirmedical plans so they can continue with treatments.

We have developed a new global management rolefocused on improving the health of employeesaround the world by developing health and well-being resources and sharing best practice. In 2006,we:

• developed a Health Risk Appraisal tool that canbe used at all our sites

• worked with the World Heart Federation on ajoint project at two of our sites in India. Thisground breaking three-year study will look attwo different interventions aimed at reducingthe effects of chronic disease, identifying themost effective interventions that are sustainableand transferable to other companies andcommunity programmes

• began global health education webinars (web-based seminars)

ErgonomicsThe reduction of musculoskeletal illness and injurycontinues to be a key area of focus, because it isone of the leading causes of time away from work.We have set a target to reduce the number of theseillnesses and injuries by 5 percent each year throughto 2010. Better workplace and job design, a sciencecalled ‘ergonomics’, will prevent musculoskeletalinjuries and illnesses as well as increase efficiencyand productivity.

Ergonomics improvement teams include cross-functional team members who impact how workand the work environment is designed andimplemented. We now have establishedergonomics improvement teams at manufacturingsites around the world. In 2006, ergonomicsworkshops were provided to regions in the US, UK,France, India and Malaysia to increase in-houseergonomics knowledge and expertise.

Sites share good practices for work, ranging fromcommercial operations to laboratory research tomanufacturing, via an intranet site called The GlobalErgonomics Community. This intranet site providesaccess to the latest information on ergonomics,good practices and validated tools for practitioners,including our online computer ergonomics riskassessment tool. The online assessment is used by144 GSK sites globally. Over 17,800 employeesworldwide have used the tool during the past twoyears to assess their computer work and to takesteps needed to improve their workstations.

Ergonomic principles are integrated into designsincluding major engineering projects, and furnitureprocurement takes ergonomics into considerationto ensure that appropriate furniture and equipmentare selected.

HIVWe provide anti-retroviral treatment to all HIVpositive GSK employees (full and part-time) andtheir families in countries where treatment is notavailable adequately or consistently through thelocal healthcare system. (For more backgroundinformation see employee access to anti-retroviraldrugs.)



Our programmes cover a wide range of health andsafety (H&S) aspects, from providing safety trainingfor sales employees to working with all employeesto improve their general health. This section reportson specific health and safety issues. See theEnvironment section on page 52 for moreinformation on how we manage environmental andbroader EHS issues.

HEALTH AND SAFETYMANAGEMENT We manage health and safety through anintegrated environment, health and safety (EHS)management system. The system incorporates ourEHS and Employee Health Policies, EHS Vision and64 Global EHS Standards. Our EHS Plan forExcellence sets out our strategy for improving EHSperformance. We renewed the Plan in 2006 andextended it to 2015. See more on our EHSManagement System in our background pages.

OHSAS 18001 certificationIn 2006, one additional site achieved certificationto the international health and safety standardOHSAS 18001. This brings the total number of manufacturing sites certified to 21 out of 80 pharmaceutical and consumer manufacturingsites. The certified sites are in Argentina, China,Egypt, France, Germany, India, Japan, Kenya,Mexico, Poland, Saudi Arabia, Turkey, USA and theUK. The voluntary certification process is beingreplaced with a plan to require all manufacturingsites to be certified by 2010.

Training and awarenessTraining is targeted to match employeeresponsibilities. Employees with responsibility forH&S issues receive regular training about initiativesin areas such as ergonomics, chemical exposuresand driver safety. This is handled through regionalmeetings of H&S staff. They in turn train employeesin manufacturing, research, sales and otherdivisions. Corporate EHS and Employee Health staffarrange annual meetings to determine trainingissues and provide training materials.

We also want employees to be aware of health andsafety in their personal lives. Employee bulletins,announcements on the myEHS website, the CEO’sEHS Excellence awards programme and Health andSafety Week activities aim to raise employeeawareness of issues such as wearing seat belts,being careful with electricity and using laddersappropriately.

We conduct a Health and Safety Week everyOctober to coincide with the European Health andSafety week and Fire Safety Awareness Month inthe United States. Information kits are sent to allsites to help them develop ideas and plan activities.

In 2006, over 20,000 employees from 63 sites in 38 countries took part in the Health and SafetyWeek. Activities included safe driving education,training in fire evacuation, ergonomics, first aid,awareness-raising on noise, healthy eating andlifestyles.

We have developed awareness-raising material foruse by peer educators, in a project funded byPositive Action and delivered by the National AIDSTrust. GSK and other employers use these materialsto deliver training in ways that address the problemsof HIV and AIDS-related stigma.

The materials are based on the experience of GSKKenya and adapted versions have now been usedin India and Central America. A French version hasbeen promoted by the GSK Foundation acrossfrancophone Africa.

Flu Pandemic PreparednessGSK is committed to supporting governments andhealth authorities around the world, as well as ourown employees, in minimising the impact of aglobal influenza pandemic.

GSK will play a vital role in providing potentially life-saving medicines and vaccines for flu, as well ascontinuing to produce our other critical medicines.We have invested more than $2 billion in expandingseasonal flu vaccine capacity, developing an avianflu vaccine, and increasing production capacity forthe anti-viral flu treatment Relenza. See ourContribution to Society.

We have also been developing plans to ensure thecontinuity of critical business operations andprocesses, and to safeguard the health of the GSKemployees, their dependents and key contractorson our sites. Every GSK market is developing acomprehensive country plan which covers all localbusiness units. The plans include annual seasonalflu vaccine and travel health programmes, measuresto reduce infection risk at work, management ofsickness absence, and provision of a treatmentcourse of anti-virals (and possibly vaccine) to allemployees and immediate family membersworldwide. All markets are expected to havecompleted plans by the third quarter of 2007.

HEALTH AND SAFETY AT WORKThe health and safety of employees and contractorsis an absolute priority for GSK. We haveprogrammes to systematically assess the risksassociated with our operations. We monitorperformance, aiming to learn from the causes ofincidents and take action to protect employees andothers in the workplace.

Our ultimate aim is to eliminate all work-relatedinjuries and illnesses (I&I). We are now focusing on‘reportable’ incidents. These are more serious thanfirst aid but do not necessarily result in time off work(lost time) which was the main measure ofperformance we used in the past. We believe thataddressing causes of these minor events will help toeliminate risks and hazards, which should lead tofewer reportable cases as well as lost-time I&I cases.

Our new target (from 2007) is to reduce reportableI&I by 5 percent a year. We will still monitor andreport ‘lost time’ incidents but we no longer have atarget for this measure.




Excellence awardsThe Chief Executive Officer’s Environment, Healthand Safety (EHS) Excellence Awards recognise andreward innovation by GSK sites. The winning entryin the EHS Initiative health & safety category in 2006is featured on this page.

See CEO’s EHS Excellence Award for more aboutthe awards programme and winners from previousyears. See Employee Health on page 44 for more onresilience.

EHS AUDITSWe aim to conduct EHS audits at each operationalsite at least once every four years. We carry out morefrequent visits at selected sites, depending on anassessment of risk and the issues raised by previousaudits.

Auditors signal ‘critical’ findings if they concludethat there is a high probability of incidents withpotentially serious consequences. They made fivesuch findings in 2006. These involved seriousdeficiencies in:

• Controlling exposures to high hazard chemicalagents

• Managing dust explosion risks (related to a dustcollector)

• Managing fire or explosion risks fromflammable liquids

• Preventing falls from elevated locations

Site actions are monitored to ensure thatappropriate actions have been taken to mitigaterisks and ensure ongoing compliance. None of thecritical findings have become ‘delinquent’ (greaterthan 90 days overdue).

We actively track audit findings and identifyimprovements with follow-up audits. For sitesscoring less than 50 percent, we also provideincreased support from the audit team, includingfollow-up visits to ensure progress, and discussionswith senior business management about increasedsite resources. Many sites require several years toput adequate systems and programmes in place inthese areas.

We introduced or continued specific work in thefollowing areas in 2006 to achieve improvements:

• Chemical agents – monitoring to determineexposure and ensure adequacy of respiratoryprotective equipment that may be required atunit operations until engineering and othercontrols can be implemented

• Resilience – rollout of the tool for assessingteam resilience, training during EHS NetworkMeetings

• Ergonomics – training in ergonomic riskassessment during Network Meetings as wellas regional training

• Risk assessment – the Guideline was revised andaligned with the risk assessment requirement inthe Quality group

• Self audit – training and workshop on self-auditing conducted at EHS Network Meetings

• Management system elements – agreement ofGlobal Manufacturing and Supply to targetOHSAS 18001 certification (along with ISO14001 certification) for all pharmaceutical andconsumer manufacturing sites

INJURY AND ILLNESS RATESAND CAUSESOur main measure of injury and illness is the numberof reportable cases which we require sites to report.We express this as a rate per 100,000 hours worked.

Our target is to reduce this reportable injury andillness rate by 5 percent each year to the end of2010.

We also measure the number of days lost frominjuries and illnesses. This provides an indication ofthe severity of the incidents, although it is only arough guide. For example, an illness could lead topermanent hearing loss or other disability withoutresulting in significant lost time.

The main data cover GSK employees and contractworkers who we directly supervise. Separately, we report data for contractors who work on GSKsites but supervise their own staff. (Contractors’ dataare not covered by the SGS verification). The data are collected from all our 80 pharmaceutical and consumer manufacturing sites, 12 of our 13Biologicals manufacturing sites, all 22 pharma-ceutical and consumer research and developmentsites, all 8 major office locations and 59 smalleroffices.

Causes of injuries and illnessesInjuries with and without lost time arise mainly fromslips, trips or falls, over-exertions or strains andmotor vehicle accidents.

Lost-time illness stems mainly from mental ill-healthand musculoskeletal problems (primarily repetitivestrain injury). Musculoskeletal illness is the maincause of reportable illness which does not lead todays off work, accounting for about a third of thetotal.

2006 highlightsAt 76 sites in 38 countries, there were no lost-timeinjuries or illnesses during the year. In addition:

• one site in India achieved 4 million hoursworked without a lost-time injury or illness

• one site in India achieved 3 million hoursworked without a lost-time injury or illness

• one site in the US achieved 2 million hoursworked without a lost-time injury or illness

Employee health managementUK – resilience policyEmployee Health Managementdeveloped a wide-rangingresilience policy that successfullyaddresses work-life balance andpressure issues, to the benefit ofGSK and our employees. Wedefine resilience as the ability to be successful, personally andprofessionally, in a high-pressured, fast-paced andcontinuously changing environ-ment. The policy encompassesthe team resilience process andpersonal resilience workshops,which focus on work and homebalance and fulfillment.

This project has globalapplication, although the focusin the first year was the UK andUS. In the second and third yearof the programme the projecthas been offered globally and is currently active in India, Japan,China, Brazil, Argentina, Finland,Czech Republic, Nigeria andIsrael. It has reached more than7000 employees.

This project won first place inthe EHS initiative – health andsafety category of the CEO’s EHSExcellence Awards.



PerformanceIn 2006 we recorded 995 injuriesand 376 illnesses (total of 1371incidents), compared to 984 and344 respectively in 2005. Employees lost working days in 646 (47 percent) of theseincidents (624 in 2005).

GSK’s injury and illnessperformance placed us in thethird quartile of a benchmarkindustry group in 2005 whichmeans we need to improve.

Working time was lost in 552 injuries and 94 illnesses, a rate of 0.33 lost time injuries and illnesses per 100,000 hoursworked.

There were 443 injuries and 282 illnesses without lost time, arate of 0.37 injuries and illnesseswithout lost time per 100,000 hours worked.

There were 11,281 lost calendardays from injuries and 4,386calendar days lost from illnesses,a rate of 8 calendar days lost per 100,000 hours worked.

See data table on page 74 formore details.

• Fifteen sites in Argentina, Canada, India,Philippines, Singapore, Spain, Sri Lanka, UK andthe US achieved 1 million hours worked withouta lost-time injury or illness.

SERIOUS INCIDENTS ANDFATALITIESFatalitiesIn November 2006, two employees of contractorsdied as a result of injuries suffered in an explosionand fire caused by a ruptured butane cylinder usedfor cooking in the canteen of the Agbara, NigeriaConsumer Healthcare factory. A thoroughinvestigation was conducted by the global auditteam and improvements identified. Progress inimplementing the improvements will be monitoredby the audit team and learnings from the incidentwill be shared across GSK.

In April, one sales employee in India died as a resultof head injuries suffered when his motorbikecollided with another motorbike.

Irvine – explosion A serious explosion occurred at the Irvine, UK site inFebruary 2006, involving a ‘placebo’ batch used totest plant conditions and controls. Two operatorswere injured. The event has been thoroughlyinvestigated, learnings shared and improvementsmade. The UK Regulator, HSE, is considering itscourse of action, with prosecution a possibility.

AmputationsIn 2006, there were three incidents involving GSKemployees that resulted in partial fingeramputations caused by work equipment.

Target

0.0 0.2 0.4 0.6 0.8 1.0 1.2

injuries & illnesses per 100,000 hours worked

Baseline2001

2005

Baseline2006

Target2010

Five year trend in employee fatalities:

We investigate the circumstances of all fatalities andother serious incidents and assess what can belearned to reduce the risks. We also issue globalalerts (posted on our intranet site) to communicateinformation that could help prevent similar incidentsat other sites.

SAFETY PROGRAMMESWe systematically assess risks to anticipate potentialaccidents, and put programmes in place to minimisethem. We learn from investigating the causes ofaccidents and make improvements accordingly. Inthis section we cover four key areas: driver safety,process safety, material hazard information andchemical exposure.

Driver safetyOur sales representatives drive long distances everyyear and are therefore particularly at risk of beinginvolved in work-related road traffic incidents. In2006, there were 184 driving accidents, 1 resultingin a fatality and 116 resulting in lost time. Theseaccounted for 21 percent of lost-time injuries.

Our compliance tool for drivers, called ‘EHSEssentials’, includes instructions and guidelines ondriver training, vehicle selection, risk assessment andaccident reporting as well as other information. Wecontinue to use it as we implement our driver safetyprogramme around the world.

Around two thirds of GSK’s commercial businesseshave extensive driver safety programmes in place.They include driving licence checks, guidance on theuse of mobile phones in vehicles, driver safetytraining, tracking and reporting incidents. We areworking to ensure all sites have the same highstandards in place. In 2006 we have beenconcentrating on improving areas such as accidentand injury reporting and driver training.

In a few countries we provide motorbikes orscooters for employees and have produced a GSKmotorbike rider safety manual. This has beentranslated and distributed to employees in countriessuch as Bangladesh, India, Indonesia, Pakistan andVietnam. These countries have now also fullyimplemented the GSK requirement for every driverof a motorbike to wear a helmet. We will continueto follow up and monitor the implementation ofthe motorbike safety programme.

Fatalities

2002 3

2003 5

2004 2

2005 1

2006 3

Reportable injury and illness rate

Reportable injury and illness rate

200120052006

1.190.680.69

Year I&I per 100,000 hours



Process safetyOur process safety programme ensures that safetyis built into all manufacturing, research anddevelopment processes. The programme is basedon hazard identification, control and riskassessment.

We launched a major review of our process safetystrategy in 2006, following the explosion at ourIrvine factory. This encompassed:

• consistency of design standards

• evidence for the Basis of Safety, including anygaps in documentation and installation checks

• skills and competencies in process safety

• control of change and non-routine operations

• culture issues – awareness, attitudes andbehaviour

Material hazard information In 2006 we focused on preparation for newlegislation that will have a significant impact on howwe assess and communicate material hazardinformation. We continue to publish EHSinformation on our key products in safety datasheets. Some 600 of these for pharmaceutical andconsumer healthcare products that are sold in theUS or Europe are available on our website – seesafety data sheets for more information.

We are using more alternatives to animal testing inour occupational toxicology programme. Forexample, in 2006 we assessed 23 chemicals forpotential to cause skin and/or eye irritation in ourworkforce. All of these assessments were conductedwithout the use of laboratory animals by usinginformation about chemical structures and novelhuman tissue tests. Our occupational toxicologistsused this and other information to establishworkplace exposure limits for 35 unique GSKmaterials.

To support our commitment to ensure that ourproducts do not adversely affect the environment(see pharmaceuticals in the environment) wehave enhanced our environmental hazard testingprogramme to include a number of new studiesaimed at assessing long term effects in aquaticorganisms. In addition, due to new EU technicalguidelines we are conducting more extensiveenvironmental testing of new drug substances.

Occupational hygiene and control ofchemical exposureIn 2006, exposure to chemicals resulted in 7 respiratory or skin-related lost-time incidents and 98 cases which did not result in lost time. Together,they accounted for 28 percent of work-relatedillnesses.

In 2004 we developed a strategy to control chemicalexposure up to 2010. This sets out a plan to achieve‘respirator free’ status – having validated control at

the source for 80 percent of unit operationshandling high hazard compounds, so thatemployees do not need to wear protectiveequipment.

There has been substantial progress during 2006:

• we have recruited a number of regionalhygienists to deliver an improved occupationalhygiene service to businesses around the world

• we are establishing our baseline performanceand have developed and deployed across thebusiness a tracking tool to monitor progresstowards ‘respirator free’ and completion ofChemical Risk assessments

• we have enhanced collaboration betweenengineers and occupational hygienists at alllevels to ensure that control solutions areimplemented

• we have revised and updated guidelines to thebusiness on control measures

• we have begun to build our occupationalhygiene network by bringing specialiststogether, and held the first network meetingfor occupational hygienists to ensure a commonapproach and understanding across thebusinesses

• we have engaged with new productintroduction teams to ensure that newinstallations meet ‘respirator free’ standards.

See more on our approach to Occupationalhygiene and control of chemical exposures on ourbackground pages.

http://www.gsk.com/responsibility/cr_issues/ehs_mf_ems_programmes.htm#hygiene

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We endeavour to ensure that all oursuppliers follow the same high standardsas GSK with regards to the environment,

health and safety (EHS), loss prevention and humanrights. Given the size and global scope of our supplychain this is a challenge and we recognise that somesuppliers do not meet these standards (see supplierperformance below).

We work with suppliers on these issues. Ourapproach includes:

• pre-assessments before we start working witha new supplier

• inclusion of human rights and EHS requirementsin supplier contracts

• review of EHS and human rights in routinesupplier engagements

• EHS supplier audits

Our supply base is large and complex so it is notpossible to engage directly with all our suppliers onthese issues. We focus on critical suppliers.

Critical suppliers are contract manufacturers andthose suppliers that present the greatest risk to GSKon one or more of the following issues:

• threats to continuity of supply

• hazards associated with manufacturingprocesses and materials

• environmental impacts

• regulatory requirements

• relevance to the supply of essential medicines

These suppliers are based primarily in Europe, NorthAmerica, and Asia and account for approximately30 percent of our total supplier spend.

We expect critical suppliers to work to highstandards and produce an uninterrupted supply ofmaterials and services to GSK. If they do not, thesafety, effectiveness or availability of our medicinescould be affected. For these reasons, it is importantthat we forge long-term relationships andundertake regular monitoring to assess progress andto allow intervention where necessary.

Supply chainOur supply chain is complex, with over 75,000 suppliers worldwide. It ranges from majorstrategic relationships with suppliers that manufacture active pharmaceutical ingredients,intermediates, raw materials and packaging for GSK medicines through to local contracts

for goods or services such as office equipment, cleaning and security.

Supplier selectionCritical suppliers must pass detailed assessmentsbefore they can be selected. As well as looking atquality, we assess their policies and procedures forhealth and safety, human rights, and environmentalissues. This includes the use of questionnaires, on-site reviews, quality audits and EHS audits of facilitieswhich will directly supply GSK.

All contract manufacturers must also be approvedby the applicable regulatory authority before theycan start manufacturing GSK medicines.

SUPPLIER CONTRACTSEHSOur supplier contracts contain requirements basedon our Global EHS Standards.

Human rightsOur supplier contracts contain human rights clausesbased on international workplace norms in theInternational Labour Organisation conventions andthe UN’s Universal Declaration of Human Rights.You can read the human rights clauses in thebackground section of our website.

All new local and central supplier contractsworldwide include human rights clauses and theseare added to contracts with existing suppliers as theyare renewed. Most contracts are renewed on athree-year cycle so the vast majority of our contractsnow include the clauses.

Engagement and auditingWe provide contract manufacturers withinformation on the EHS risks associated with theGSK materials they are producing or handling.

We inform suppliers about our ethical requirementsand policies. Our supplier booklet on working withGSK includes our ethics policies and explains thatGSK employees are prohibited from accepting giftsand entertainment. Suppliers are asked to respectthis position and to apply the same standards in theirbusiness and interactions with GSK. In somecountries we send out letters to all suppliers duringthe local festival season making them aware of ourpolicies and asking them to refrain from sendinggifts and providing entertainment.

GSK’s supply chainGSK manufactures and sells adiverse range of products whichmeans we source from a widerange of suppliers. For example:

Products: from agriculturalsourced materials such asblackcurrants and milk, topetrochemicals for our complexchemical compounds for theactive ingredients in ourpharmaceuticals.

Volumes: from high volumetailor-made packaging andplastics through to lower volumeraw materials such as flavours.

Services: from suppliers oftemporary workers and cleaners,to research companies andprofessional advisors. We arebuying from more serviceproviders as we start tooutsource services previouslymanaged in-house.

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We consider EHS and human rights issues duringour routine interactions with critical suppliers. Theseinteractions include ongoing supplier reviews as wellas follow-up visits by procurement, quality and EHSstaff. We also hold global and regional supplierreview meetings where senior GSK managersaddress and interact with suppliers on key issues.

During 2006 we started a pilot project to assess therisk of human rights issues occurring amongsuppliers of services. We decided to focus in thefollowing two areas:

Suppliers of outsourced business processesWe are starting to work with more suppliers in India.This includes providers of outsourced services, forexample our accounts payable department is nowmanaged by an Indian supplier, as well as providersof technology and professional services. Since this isa growing and important area we are focusing onensuring that we select the right suppliers withstrong reputations for their Employee Satisfaction.Our research shows that the suppliers we work withtypically lead the way in surveys on best Indianbusiness process outsourcing employers.

Suppliers of promotional gift itemsMany of our gift items sourced from our Indianbusiness, are sourced from within India in anindustry with a higher risk of the use of child labour.

We have implemented a process of unannouncedspot checks for these suppliers, often during thenight. As a result of these spot checks we haveagreed corrective actions with some suppliers toimprove their standards in this area.

EHS audits We conduct regular environment health and safetyaudits of critical suppliers and contract manufact-urers of pharmaceutical and consumer healthcareproducts. Priority for undertaking audits is based onbusiness and EHS risks, including factors related tocontinuity of supply, hazards presented by processesand materials, regulatory regimes and essentialmedicines. We focus on the 150 higher risksuppliers.

A quantitative evaluation is made of sites againstEHS standards and protocols. Acceptance criteriaare in place and sites will not be used for supplyunless minimum performance levels are met.Recommendations are made following audits andprogress is monitored with particular focus onpoorly performing suppliers. Performance reviewsare undertaken to check progress and to help drivecontinuing improvements. For some sites thismeans, at the least, an annual visit.

Supplier performanceIn 2006, 28 assessments were conducted ofsuppliers of active pharmaceutical ingredients andintermediate materials for the global pharmaceuticalsupply chain. Of these, ten were in the UK andEurope and 18 were in the Asia region. Six sitessupplying other products and materials wereaudited in the UK, EU and US, one in Asia and onein South Africa.

The EHS acceptability criterion for key suppliers andcontract manufacturers is scoring at least 50 percentin the EHS Quantitative Audit scheme. Where EHSperformance is identified as unacceptable (less than50 percent) progress is required before EHS risks andimpacts can be considered to be managed robustlyand sites considered as acceptable suppliers orcontract manufacturers.

A wide range of performance was noted for thesites audited. The range of audit scores for thesesuppliers was 23 percent to 90 percent. Eleven ofthese suppliers failed to meet the 50 percent EHSacceptability criterion, and the companies wereeither not progressed for supply or work isunderway to ensure improvements are made.

During these EHS audits no human rights issues ofsignificant concern were noted.

Training for GSK procurement teamsIt is important that our employees understand ourstandards. We provide training for procurementstaff as part of our Sourcing Group Managementprogramme. This explains how we develop sourcingstrategies and our criteria for supplier selection,including human rights and EHS. The training iscompulsory for all new procurement staff.

In 2006, we launched new training on EffectiveContracting. This explains our requirement forhuman rights clauses to be included in all suppliercontracts. It will be compulsory for all procurementstaff and we expect everyone to have completedthe training by the end of 2007.

Reporting suppliers’ EHS performanceWe have tried to collect EHS data from key suppliersover the past five years but have had only limitedsuccess. Suppliers either do not collect the data anduse it to manage their EHS programmes or theycannot identify the impacts specific to manufactureof GSK products. Data that we have received fromsuppliers is often not reliable.

In 2007, we will conduct a survey of suppliers, at therequest of both the Corporate ResponsibilityCommittee and the Audit Committee of the Board,to determine why the suppliers have not providedus with this information. We want to understandsuppliers’ impacts as well to measure the total EHSfootprint of all of the processes that generate ourproducts, ie both GSK and supplier facilities.

We are working with our Ribena suppliers and theWildlife Trust to improve biodiversity on blackcurrantfarms and to understand the overall environmentalimpacts of these operations. See the case studysection on our website for more details.

http://www.gsk.com/responsibility/cr_report_2005/case-studies/index.htm



We discover, develop, manufacture and sellpharmaceutical and consumer products.This requires significant resources, so we

need to understand, address and report onenvironmental impacts. They include issuescommon to all manufacturers, such as the use ofenergy and water, and waste handling. We alsoneed to consider potential impacts of certainchemicals which can release volatile organiccompounds (VOCs) and the chemicals in ourinhalers which can damage the ozone layer andcontribute to climate change. And our industry canhave specific impacts through the release ofpharmaceuticals into the environment after use bypatients.

A systematic approach to management of theseissues is crucial because control needs to beconsistent over the long term. This is important aswe move away from controlling emissions from ourprocesses to developing and implementing newprocesses that are more efficient and therefore useless raw material and produce less waste. This is oneof the first steps toward environmental sustainabilitywhich is our long term goal.

Overall responsibility for environmental issuesrests with the Corporate Executive Team and theBoard. The Board champion for Environment,Health and Safety (EHS) is JP Garnier, the ChiefExecutive Officer. Rupert Bondy, General Counsel, isthe operational champion of EHS on the corporateexecutive team. We have a Corporate ResponsibilityCommittee and Corporate EHS department.

Environmental issues are managed together withhealth and safety through an integrated EHSsystem that aims to ensure issues and risks areidentified, standards are established and adheredto, training is provided, targets set and auditsconducted.

Our EHS Policy, Vision and 64 Global EHSStandards set the overall framework. We providesites with an EHS management toolkit whichcontains instructions and descriptions of appropriateprocedures to help them comply with the standards.

Further background information on our approach tomanaging environmental issues is available in theEnvironment, Health and Safety section of ourwebsite.

Environmental managementOur vision is to achieve sustainable competitive business advantage and environmentalsustainability through leadership and excellence. We aim to reduce our environmental

impacts and address broader sustainability issues such as climate change, productstewardship and material and energy efficiency.

THE PLAN FOR EXCELLENCE We launched an EHS Plan for Excellence in 2001which set out a strategy to improve EHSperformance over a ten-year period. In 2006 wereviewed the first five years’ performance, renewedthe Plan for the second stage and extended it to2015.

We began our review of the Plan for Excellence withan extensive consultation with key internal andexternal stakeholders, who encouraged us to adopthigher aspirations and align EHS objectives moreclosely with the business strategy.

The first five years of the plan establishedfundamental programmes that protect employees,our communities and the environment. Therenewed plan includes a commitment tostakeholder engagement and strengthens the focuson sustainable environmental practices throughoperational efficiency. This requires a new approachto manufacturing processes and means we willmove to incorporating environmental performancein process design, moving from compliance and riskmanagement to adding value and creating newopportunities. For example, we want to move fromhaving to treat a hazardous waste stream tochoosing processes that do not produce hazardouswaste.

The renewed plan is designed to complement thebusiness strategies and contains three EHSAspirations for GSK by 2015:

• EHS fundamentals embedded in thebusiness – we believe that to produce andsustain high EHS performance we need tocombine structured EHS systems with theattitudes and values that create a positive EHSculture. To achieve this we need to embed EHSawareness and systems in all GSK activities

• Environmental sustainability – we believe weneed to embrace environmental sustainabilityas a driver for competitive advantage. To do thiswe have to define the principles ofenvironmental sustainability and progressivelyintegrate them into the business, translatingthem into practical action in line with advancingknowledge

What is the top environmentalpriority for GSK?The priority is to manage all theissues properly, looking at people,plant and processes, in the contextof a long-term strategic plan.

We have been working on thatsince GSK was formed. In 2001 and 2002 I asked all operationsworldwide to contribute to thecreation of a self-regulatingframework of programmes (i.e. policies, standards, guidance,audits, etc.) that defines how webelieve we should operate, withlegal compliance as the basicfoundation. In 2003, we identifiedthe key risks to GSK as employeechemical exposure, process safety,ergonomics, and driver safety,which we will continue to work on for some years to come.

In 2004, in discussions with ourexternal stakeholders about EHS issues, they said that climatechange and energy conservation,pharmaceuticals in theenvironment and the use ofhazardous/toxic chemicals wereour key external challenges. In2005, we worked to complete coreprogrammes and EHSmanagement systems and achieveour improvement targets. Now it’stime to move to the next stage.

Q&A continues on next page

Q&AJames Hagan Vice President, CorporateEnvironment, Health and Safety


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• Open and transparent EHS externalrelations – we believe that externalstakeholders who have a legitimate interest inthe company’s EHS affairs should have readyaccess to relevant information and theopportunity for dialogue about issues thatconcern them. We also believe that buildingopen relationships and partnerships can lead tobusiness opportunities, while failure to engagemay damage our reputation

Each of these aspirations is supported by strategicobjectives with performance targets in some areas.

Progress and targetsOur EHS Plan for Excellence initially set out targetsin 10 areas, with interim targets for 2005.

See 2005 report for progress against thesetargets.

The plan for the next 10 years is aligned with theGSK business drivers and with our desire to movetowards environmental sustainability. We haveintroduced these new targets:

• Material efficiency – by targeting efficiency wesimultaneously target resource consumption, airemissions, water pollution, waste disposal andsafety concerns

• EHS audit scores – these are a measure of thesuccess of our management systems approach

These are the improvement targets across thecompany up to 2010, with 2006 as the newbaseline:

We no longer have targets in these areas:

• global warming potential – we have replacedthis with a target on energy efficiency

• hazardous waste – we are now addressinghazardous waste through the new materialefficiency target

Annual reductions per £ of sales

Energy 1%

Solid waste 1%

Water 2%

Air emissions (volatile organic emissions) 2%

Wastewater (chemical oxygen demand) 3%

Material efficiency

Achieve average 2% material efficiency ofmanufacturing processes for new products introducedbetween 2006 and 2010

Cumulative targets for 2010

Ozone depletion 100% elimination

EHS audit scores

– Average 82%

– Minimum 70%

Each business sector will develop its own objectivesto support the corporate targets and will developspecific short and medium-term plans to achievethem. Individual sites may also set local targets tocontribute to the business target.

We use annual action plans to focus our efforts onselected priority issues. The theme for 2006 was‘Embedding EHS in the Business’ following the initialfocus on fundamentals in the first 5 years of thePlan.

The theme for 2007 is ‘EHS Stewardship’, whichmeans caring for the present and thinking to thefuture when we make decisions, building excellenceover time and maintaining the highest possiblestandards in everything we do. Each business sectorwill encourage a culture that accepts thisresponsibility by incorporating EHS into theirplanning and business processes.

Corporate EHS will work with businesses to:

• determine which elements of environmentalsustainability we need to focus on and begin topromote environmental sustainability principlesthroughout the business

• continue the pilot programme of developingand distributing product stewardship guides formarketed products

• expand our programme of discussions with EHSexternal stakeholders beyond the UK to the restof Europe and into the US.

See more in the Product Stewardship section andour background web pages.

STAKEHOLDER ENGAGEMENT Stakeholder engagement plays an important role inhow we manage EHS. This section reportsengagement specifically on EHS issues. Seeengagement with stakeholders in the ManagingCR section for details of engagement on othercorporate responsibility issues.

In addition to inclusion in the Dow JonesSustainability Index and the UK FTSE4Good,GlaxoSmithKline is rated by Business in theEnvironment (BiE), in the ‘premier league’ in a fieldof 145 participating companies. This rating indicatesthe extent to which we interpret environmentalresponsibility into the way we manage our businessand in our environmental performance.

We have frequently engaged through ad hocmeetings with a range of external stakeholders tohelp us understand their views and identifyemerging issues. In 2005 we stepped up ourinternal and external engagement on EHS issuesand created a formal stakeholder panel in the UK toprovide a perspective on our EHS performance. Thepanel is facilitated by The Environment Council, anindependent charity, and the 10 members representour customers, suppliers, regulators, public interestgroups and investors, plus four senior EHSrepresentatives from GSK.

The next step is to expand ourfocus by improving our use ofnatural resources as a steptowards sustainability. That’scomplex.

We are working on materialefficiency in our production (see page 57). Energy is also acritical component and in 2006GSK adopted a life cycleapproach to investing in energyefficiency and renewable energy.(see page 60). In fact our CEOhas requested a further review in2007 of energy saving measuresand use of renewable energy.Product stewardship is anotheraspect of sustainability and wewill need to focus on the issue of pharmaceuticals in theenvironment (see page 59).

What is the highlight of 2006?Approval of the second stage ofour Plan for Excellence, up to2015 (see page 52). In the firststage of the plan, since 2001, wefocused on the fundamentalsand improved our performancein many areas, but we need todo more. In the second stage ofthe plan, we will keep a keenfocus on maintainingimprovements, based on thatfoundation and on new annualimprovement targets. In 2006,we established improvementtargets for manufacturing newmedicines which will move ustoward our goal of sustainability.

From a tangible standpoint, ourmanufacturing function (GMS)has accepted the challenge fromthe Board of Directors to be ISO14001/ OHSAS 18001 certified,which will embed managementsystems into the business. Wehave also created new EHSDirector positions in GMS andBiologicals who sit on theexecutive teams and will helpEHS to be integral to all businessdecisions.


http://www.gsk.com/responsibility/cr_report_2005/environment/targets.htm

http://www.gsk.com/responsibility/cr_issues/ehs_mf_pe_themes.htm

http://www.gsk.com/responsibility/cr_issues/ehs_mf_i_product_design.htm

http://www.the-environment-council.org.uk/



Plans and systems aren’tenough, are they?No, they’re not. First, we need to have great people, with theright qualifications and training,working on these issues. We alsohave to have the right culture,with senior managementsupport to promote the rightbehaviour and investment. Weare taking the position that wewon’t compromise onenvironmental protection oremployee safety.We are seeingconsciousness about environ-ment, health and safety reallybecoming embedded in thebusiness. This was our theme for 2006 and we have seen itreflected in enhanced attitudesin the business on EHS. We aremoving from bolting on controlsfor existing processes to buildingthem in so they are central tothe operation. This culturechange is central to the secondstage of our 10-year plan. Itmeans that we need to haveaddressed issues with our people(qualified, trained and aligned),our plants (our infrastructure isproperly designed, installed andmaintained) and our processesand systems (our managementapproach identifies the risks anddevelops programmes tomanage these risks).

What is your priority for 2007?Our theme for 2007 is EHSstewardship. That means wewant to do more to embed thenew culture in the business, sothat people really understandthat this is not a short-termexercise and they need to have avision and an understanding ofthe long-term impact ofeverything that we do. And weneed to think aboutenvironmental impacts such asclimate change and embedinherent safety over the wholelife cycle of our products, fromraw material to waste. Thischange will reflect not only howGSK manages EHS but how EHSbenefits GSK. For example,addressing climate changethrough improved energyefficiency benefits not only the environment but also has a financial benefit for GSK.


It provides an opportunity for EHS experts fromacross GSK’s businesses to meet stakeholders anddiscuss emerging EHS issues. Feedback has beenused in developing the EHS Plan for Excellence.

The panel meets every six months. In 2006discussions covered:

• our engagement strategy

• the need for public position papers on climatechange/energy management, the managementof hazardous chemicals, and pharmaceuticalsin the environment (the final versions, approvedby GSK management, are published ongsk.com)

• a serious process safety incident at our Irvinesite (see the Health and Safety section)

• the strategic plan for EHS

• EHS performance in 2005

• how EHS aligns with GSK’s business direction

Stakeholders have repeatedly highlighted their viewthat it is important for GSK to address broader issuessuch as climate change and sustainabledevelopment. We are beginning to address broaderaspects of sustainability, for example in our work onmaterial efficiency.

We plan to extend our stakeholder engagementactivities to the US, Europe, and beyond over thenext few years, beginning in the US in 2007. (SeeStakeholder engagement background pages.)

Local engagementMany of our sites also engage with stakeholderslocally, through activities such as open days,newsletters and community projects. For example,our Dresden site conducted intensivecommunications with the local community ahead ofdoubling the manufacturing capacity for its fluvaccines. The construction activity was particularlysensitive because the site is in a residential area. Thiswork won third place in our CEO’s EHS ExcellenceAwards for community projects.

In 2006, we conducted a survey of EHS stakeholderengagement at 52 GSK sites around the world. Thisfound that our sites engage most frequently withlocal government, the emergency services,neighbours/resident associations, local environ-mental and advocacy groups, and local businesspartners. Our sites reported that open dialogue withcommunities helps to build strong relationships andto dispel preconceptions. In particular they reportedthat it is beneficial to involve local communities inenvironmental risk assessments and the develop-ment of emergency response plans and site wastemanagement plans.

Internal engagementWe engage with our GSK staff throughout thebusiness in several ways. This includes discussionswith business leaders to debate and agree the wayforward for EHS at GSK, especially to agree theannual action plan and position papers on specificissues such as energy.

Engagement with EHS professionals helps us towork out details of programmes such as energyinitiatives.

In 2006, we surveyed staff who are involved in EHSto assess the success of our communications andto identify areas for improvement. We alsocompleted an internal review of CorporateEnvironment Health and Safety (CEHS)communications.

The EHS Framework documents received highmarks for usefulness as a source of information, asdid the EHS Community webpage. But the webpage needs to be more user-friendly and we willrelaunch the site in 2007.

We found that there was high awareness of the EHSPlan for Excellence, of EHS programmes on chemicalagents and process safety, of EHS reward andrecognition programmes, and of the theme ofsustainability. But people said we needed to beclearer about our messages, especially priorities andtheir relationships to the overall mission of thecorporate EHS department and GSK. We willaddress this in 2007.

In 2006, we also took feedback from company wideGSK employees to develop the 2006-2015 EHSStrategic Plan.

Engagement with regulators GSK is keen to see proper measures in place toprotect the environment and safeguard thedevelopment and launch of new medicines. At thesame time, regulations need to be workable forindustry to avoid unnecessary cost and bureaucracy.We collaborate with regulators to help themdevelop effective controls.

In 2006 we engaged with regulators in the UK onthe government’s work to improve regulation ofbusiness. We submitted comments on 14 EHSregulations which we consider should be reviewedfor practicability, and hosted a visit from the BetterRegulation Commission to one of our pilot plants todemonstrate some of the issues. We alsoparticipated in the House of Commons SelectCommittee Inquiry into the work of theEnvironment Agency.

We worked with trade associations, including theBritish, European and US pharmaceutical industryEHS groups.

We engaged in the consultation process for theEuropean Union’s Regulation on the RegistrationEvaluation and Authorisation of Chemicals (REACH)and the Globally Harmonised System (GHS) for theclassification and labelling of chemicals. GSKsupports the aims of both these initiatives to protecthuman health and the environment. We are pleasedby the outcomes and by the efforts made by allparties to achieve workable regulation. We continueto play our part in the development of supportingguidance for REACH.

http://www.gsk.com/responsibility/cr_issues/ehs_mf_stakeholder_enagagement.htm


http://www.gsk.com/responsibility/cr_issues/ehs_mf_c_myEHS.htm



We welcome the introduction of formal guidelinesfor the conduct of environmental risk assessmentestablished under the EU’s New MedicinesLegislation. GSK has lobbied for the environmentalimpacts of pharmaceuticals to be regulated solelythrough the European Agency for the Evaluation ofMedical Products, and not also through theproposed REACH framework which would lead toduplication of effort and place an unnecessaryburden on the pharmaceutical industry.

For more details on Public Policy see the ManagingCR section, see page 7.

TRAINING AND AWARENESS Raising employees’ awareness of environment,health and safety issues and improving their skillsthrough training are key parts of our EHSprogramme. This is critical to embedding ourframework and building an EHS culture throughoutthe business. Employees at all levels need tounderstand the EHS issues in their workingenvironment. For example, employees need tounderstand the properties, hazards and necessaryprecautions associated with the chemicals theyhandle. Those who handle waste need to know itsproperties, the regulations that govern its disposal,and which materials can be recycled.

We help employees deal with these issues throughmeetings, bulletins and information on our intranetsite, as well as specific training events. We have anEHS standard on training.

The intranet site, myEHS Community, contains links to a range of programmes, including the EHS Manager information system which containspolicies, standards, guidelines, tools, trainingmaterials, examples of best practice and news. Italso provides customised management reports onEHS performance by site.

TrainingTraining takes place at site level and programmesare routinely included in induction training for newemployees. EHS training is also accessible throughmyLearning, GSK’s online training service.

In 2006 we carried out additional EHS manage-ment training for our Consumer Healthcare andRegional Pharma Supply organisations. We madesite visits for one-on-one training on the use of theEHS Manager software system.

EHS managers are encouraged to attendconferences and training programmes sponsoredby local environmental organisations and academicinstitutions.

Awareness We raise the profile of environmental issues througha variety of means, including the EHS framework,the Plan for Excellence and the Chief ExecutiveOfficer’s EHS Excellence Awards scheme. (See sidebars on the next two pages for the 2006 first placewinners.)

We also run an Earthweek every June (to coincidewith the World Environment Day) and sendinformation kits to all sites to help them developideas and plan activities. In 2006, 74 sites from 34 countries celebrated Earthweek with activitiesinvolving over 80,000 employees.

Examples of activities in 2006 are:

• The GSK site in Mississauga, Canada celebratedEarthweek by planting 2,000 seedlings or smalltrees which are indigenous to the local area,involving 350 employees

• 160 GSK employees from the Civac ConsumerHealthcare site in Mexico raised theenvironmental awareness of a group of localschool children by showing them how toseparate household waste for recycling.

We cover EHS issues regularly through EHS bulletins,and articles in GSK’s internal magazines (GSK Spirit,e-Spirit). We encourage employees to considerenvironmental issues outside the workplace, suchas minimising household waste, saving energy andwater.

For more information see EHS Communication onthe background pages.

How is GSK planning to movebeyond basic environmentalprotection to addresssustainability more broadly?As I mentioned before, ourfirst step toward sustainabilityconcerns the efficiency withwhich we use materials andenergy in manufacturingprocesses. We have a newtarget to double the efficiencyfor manufacturing newproducts introduced up to2010. After that date we hopewe will be starting to use rawmaterials from renewableresources rather thanpetrochemicals. And in themore distant future we willwant to be using biologicaltransformations rather thanchemical synthesis. All of thisneeds to happen with inherentsafety built in to all that we do.

http://www.gsk.com/responsibility/cr_issues/ehs_mf_reward_recognition.htm

http://www.gsk.com/responsibility/cr_issues/ehs_mf_communication.htm



EHS EXCELLENCE AWARDS The CEO’s EHS Excellence Awards recognise andreward GSK sites that show leadership in EHS. In2006 the programme was expanded to includeaspects of sustainability. The awards recognisepeople who have done exceptional work inpromoting and implementing EHS projects. Theyhighlight innovation and examples of good practicein EHS management to share with other sites. Eachwinner receives a trophy and selects a charity toreceive a donation from GSK.

The winners of our 2006 Excellence Awardsdemonstrate once again that many projects whichimprove environmental performance also savemoney.

In 2006 – the fifth year of the awards – there were95 entries from 25 countries. There wereapplications from all GSK’s business sectors: R&D,manufacturing and commercial, and from facilitiesmanagement teams.

The winners were chosen by a panel that includedexperts from academia, government and publicinterest groups. In 2006, 12 projects representingEurope, North America, Central America, theMiddle East and Asia received top honours.

Three of the 2006 first place award winners arefeatured on these pages. See further details onthe CEO’s EHS Excellence Award backgroundpages.

AUDITS AND COMPLIANCEAt the request of the Audit Committee of the Boardof Directors, GSK has embarked on a programmeto achieve ISO 14001 and OHSAS 18001certification.

In 2006, the leadership of GSK’s manufacturingdivision (GMS) approved a four-year programme tocertify all remaining GMS sites to ISO 14001/OHSAS18001. This programme began early in 2007 andwill be completed in 2010. Some sites had alreadyachieved certification and in 2006, one additionalsite was certified to ISO14001 and OHSAS 18001,bringing the total of dual certified sites to 21. Thismeans that 27 of our 80 pharmaceutical andconsumer manufacturing sites are now certified (6 sites are certified to ISO 14001 only).

We carry out regular EHS audits of GSKoperations, contract manufacturers and keysuppliers. The aim is to assess how well they controlrisks and comply with key legislation, and the extentto which management systems and standards arebeing implemented to improve performance andmaintain compliance. See supply chain page 50for more information, including human rightsaudits.

Our audit programme requires all manufacturingand R&D sites to undergo EHS audits by our internalaudit team. Audits occur every one to four years,depending on our assessment of risks. Sites arerequired to develop plans to address any

weaknesses identified in the audit and auditorsmonitor sites’ progress in implementing the plans.Internal auditors are certified as lead auditorsagainst the international environment, health andsafety management standards: ISO 14001 andOHSAS18001. Sites are also expected to conductroutine self audits of their EHS programmes.

In 2006 the majority of audits were conducted usinga new risk-based process that focused on significantoperational EHS risks and environmental impacts,rather than the full range of applicable EHSStandards. The audit frequency was determined byconsidering key site risks and the demonstratedperformance in managing them effectively.

We conducted corporate audits of 32 sites,including 2 office locations. The average score was74 percent (compared to 77 percent in 2005). Nosite achieved a score below 50 percent, which weregard as unacceptable. We aim to correctunacceptable performance and continue to pursuefurther improvements to achieve best practice.

A good level of performance was found at mostsites, especially in areas covered by GSKenvironmental standards. But several aspects wereidentified for improvement, especially safety issues,see Health and Safety page 46.

In 2006, two sites achieved ‘leadership’ scoresabove 90 percent (two in 2005), while a further 10 achieved scores over 80 percent (seven in 2005).

The best performance on environmental issueswas in

• management of solid wastes

• air emissions

• emergency planning

Sites were generally weakest on

• self auditing and inspection

• risk assessment processes

• biodiversity

ComplianceAs a minimum, our policy is to comply with all legalrequirements. There were no fines or penaltiesreported in 2006. We regret that in 2006 we werein breach of regulations in three cases, promptingthe US Federal Aviation Administration to issuewarning letters without penalties regarding non-compliance with shipping regulations. Deficiencieswere:

• Non-compliance with marking, labelling anddocumentation of a shipment of inhalationaerosols

• Inoperative emergency number for hazardinformation

• Undeclared dangerous goods (flammableliquid) shipped via inter-office mail

Barnard Castle, UKThis site has made huge progressin reducing its environmentalimpacts over several years –cutting electricity use by 22 percent, gas by 23 percentand water consumption by 25 percent.

The site used energy audits toidentify potential savings such as improvements to heating and cooling equipment,installing automatic lightcontrollers and optimising boilercontrols.

Posters and special eventsencourage employees to playtheir part. Employee ‘energywardens’ have also beenassigned to each department tohelp limit energy use in theirarea. These wardens are trainedto identify potential energysavings, to make sure equipmentis being used efficiently and toraise awareness among theircolleagues.

The site has also installed two250 kW wind turbines to reducethe amount of energy used fromfossil fuel sources. This earnedthe site four regional awardsand has acted as an example forother local industrial complexes– two of which have installedsimilar turbines.

Since 2001, Barnard Castle’senergy initiatives have reducedCO2 emissions by a total of about12,500 tonnes and have savedmore than £3 million.

This project won first place inthe EHS Initiative – Environmentcategory.

Poznan, PolandOur Poznan site founded theGSK Science and Public Centre in 2004. The Centre has becomea meeting venue for communityeducation events about publichealthcare and diseaseprevention through communityeducation. It is run by GSKemployees who organiseactivities that have included:

• helping teachers to promotehealthy behaviour amongtheir students

• workshops teaching 1,000 pupils from 60 Poznan high schools how to deal with threatssuch as drugs, HIV/AIDS,aggressive behaviour andalcohol

• helping people withdisabilities to put on theatre performances for the local community

This project won first place inthe EHS Community Partnershipcategory.

http://www.gsk.com/responsibility/cr_issues/ehs_mf_rr_ceo_awards.htm

http://www.gsk.com/responsibility/cr_issues/ehs_mf_ems_audits.htm



MATERIAL EFFICIENCY We aim to improve the efficiency with which weconvert raw materials to finished product, as part ofour drive for environmental sustainability. It will helpus to reduce our consumption of resources, thewaste we generate and the cost of production.

We have set a target to double the average materialefficiency of manufacturing processes for newproducts introduced between 2006 and 2010. Thiswill achieve material efficiencies of 2 percent forthese new processes i.e. two tonnes of activepharmaceutical ingredient (API) for every 100tonnes of input chemicals.

Pharmaceutical processes are typically very complex,often requiring large amounts of solvent. Typically,the industry uses about 100 tonnes of material forevery tonne of API produced. That 1 percentmaterial efficiency compares to about 20 percentfor fine chemicals and 50 percent for bulkchemicals. It represents a waste of valuableresources, with financial as well as environmentalconsequences.

Our approach to addressing EHS issues alreadyincludes minimising the amount of material used –for example, through the eco-design toolkit (seepage 58). We are now placing a higher priority onimproving our use of materials and are bringingtogether R&D and manufacturing teams to increasematerial efficiency in the product developmentstage, as well as for selected existing products.

Our key measure of material efficiency is ‘massproductivity’. This is the mass of all materials (exceptwater but including solvents) used in the processcompared to the mass of product produced. Ournew 2 percent target applies to this measure.

We are already making improvements to materialefficiency. For example, a research and developmentteam at our Stevenage, UK R&D site, worked withour Cork, Ireland site to achieve substantialenvironmental benefits by developing a simplifiedprocess for manufacturing dutasteride, a treatmentfor benign prostate hyperplasia. The project willcontinue to deliver benefits to at least 2015.

This work won third place in the Green Chemistrycategory of the Chief Executive Officer’s EHSExcellence Awards in 2006.

The new process:

• produces 40 percent more drug substance fromthe same amount of starting material, savingup to £5.7 million/year

• saves energy – the chemical reaction nowrequires only four hours at 86°C compared to22 hours at 100°C previously

• vastly reduces the use of solvent and thereforewaste – a 70 percent reduction in the mass ofwaste, which avoids up to 80 tonnes of wasteper annum

• is more robust than the previous process,resulting in less waste through failed batches

• reduces exposure of employees to hazardousmaterials.

The chart shows the extent to which we areimproving material efficiency as compounds movethrough development stages. These data relate tocompounds in development in 2006.

In early development almost all compounds have amass productivity less than 1 percent. But theproportion with this low level efficiency falls in eachstage. By the last stage of development, beforetransfer to manufacturing, the majority achievedproductivity of more than 2 percent and some areabove 3 percent, with one process achievingproductivity of 4.9 percent.

Mass productivity distribution

100%

80%

40%

Perc

ent

20%

0%

Stage 1 Stage 2 Stage 3 Stage 4

Mass productivity % > 3

Mass productivity % 2 to 3



Stevenage, UKOur R&D site in Stevenagereduced the environmentalimpacts of manufacturing acompound which was in thedevelopment stage.

The original process formanufacturing the drug involved the use of sevendifferent solvents and a numberof hazardous chemicals. Itproduced low yields and highwaste volumes.

The team at Stevenagedeveloped a new technique that tripled material efficiency from 0.7 percent to 2.0 percent,which will reduce waste by 68 percent, using less organicsolvent and hazardous chemicals.It also required less energy andthe majority of waste could behandled on site.

This project won first place inthe Green Chemistry/Technologycategory.



PRODUCT STEWARDSHIP We address environmental issues associated withour products throughout their life cycle. This beginswith product design and continues throughmanufacturing to eventual disposal. We refer to thisas product stewardship.

This section covers product design (includingpackaging) and the impacts of pharmaceuticals inthe environment. The research and developmentsection of this report covers our approach to animaltesting. Read more about environmental issuesassociated with our products on ourbackground pages.

Product design Environment and health and safety staff work withproduct development teams to incorporate EHSconsiderations into the design of products andsourcing materials, and to identify residual EHS risksas products move from R&D to manufacturing.

Eco-design toolkit We have developed an eco-design toolkit whichscientists and engineers use to identify processimprovements and address EHS issues early in thedevelopment process. The toolkit is available on theGSK intranet and consists of five modules:

• a Green Chemistry/Technology Guide, whichhelps GSK scientists and engineers apply GreenChemistry concepts to achieve more efficientuse of resources, reduce EHS impacts andminimise costs

• Materials Guides, containing information ona range of materials used within GSKoperations, including solvents that should beavoided. One guide covers solvent selectionwhile a second deals with chemical baseselection

• a Green Packaging Guide – an assessmenttool which includes guidance and a businessprocess for evaluating and selecting packagingoptions (see Packaging next)

• FLASC (Fast Lifecycle Assessment for SyntheticChemistry) – a web-based tool and process thatallows bench chemists to perform a streamlinedlife cycle evaluation of the environmentalimpacts of new or existing processes based onthe materials used. FLASC helps scientists andmanagers to rapidly identify the ‘greenest’materials option by comparing andbenchmarking processes. It identifies thematerials that have the most significant life cycleenvironmental impacts and provides guidanceon how to reduce those impacts

• The Chemicals Legislation Guide (CLG)identifies legislation in various parts of the worldaimed at phasing out hazardous substancesfrom routine use. The CLG provides risk-basedguidance, about a variety of chemicals ofconcern, in an easily accessible form.

Each module was designed to ensure that all EHSimpacts of materials, processes and services areconsidered, from the manufacture of the rawmaterials through to the ultimate fate of productsand wastes in the environment.

See more on the toolkit and our approach toproduct design in the background pages.

PACKAGING We are working to improve the environmentalperformance of our packaging across several areas.

Our Green Packaging Guide provides guidance anda business process for evaluating and selectingpackaging options. It includes an interactive“wizard” known as WRAP – Wizard for the RapidAssessment of Packaging – which helps packagingdesigners and managers to benchmark new andexisting packaging designs, considering five metricsover the product life cycle:

• manufacture of the material

• mass of the material

• biodegradability

• PVC content

• resource depletion

The example of bottles for consumer products suchas Lucozade illustrates the range of work onpackaging:

• reducing the amount of packaging – we movedfrom glass to a plastic bottle, making a hugesaving in weight, energy and transport costsThen we progressively reduced the weight ofthe plastic bottle by 14 percent

• increasing the use of recycled material – bottlescurrently contain between 20-30 percent ofrecycled material and we intend to increase thisto 100 percent as soon as we can develop areliable supply

• improving design to facilitate recycling of ourbottles – recycling is easiest from clear bottleswith no contaminating residues. We havechanged from coloured to clear bottles andhave developed shrink sleeves which do notneed adhesive and can easily be separated

• promoting recycling in the community – we areactive members of Recoup, which is a charitableorganisation promoting plastics recycling in theUK (www.recoup.org). Through Recoup, GSKwas a key contributor to a study on ‘Design forrecycling of plastic containers’ and we arefunding another project to promote recyclingof plastic containers by providing ‘reversevending machines’ in public places



www.recoup.org



• investigating biodegradable plastics – we arefollowing developments of materials such aspolylactic acid (PLA) made from corn starch butcurrently believe return and recycling ofconventional (PET) bottles is the bestenvironmental option

• using other packaging types – we aim to usethe best type of container for each product. Forexample, we use cartons from Tetra PakTM forRibena, which minimises weight and improvesdistribution efficiency, although recyclingsystems are still under development

• other packaging impacts – we have invested ina distribution centre that is closer to the bottlesupply company, which means we canmaximise the efficiency of lorry movements

PHARMACEUTICALS IN THEENVIRONMENT Medicines work through active pharmaceuticalingredients (APIs) that are absorbed in the patient’sbody. These materials – including anything that isnot absorbed – are eventually excreted through thebody’s normal mechanisms and enter the sewagesystem. Wastewater treatment plants remove mostpharmaceutical residues, but small concentrationsdo end up in rivers or in the sea. In areas withoutwastewater treatment, higher concentrations enterthe environment.

GSK has developed business processes to ensurethat we carry out appropriate environmental tests.Environmental risk assessments are part of theapproval process for new medicines in the EU andUS, so we provide regulatory agencies withassessments to evaluate and allow for mitigation ofany potential environmental impacts. In 2006 wewere part of industry groups that met withregulatory agencies on this issue, including the Foodand Drug Administration and EnvironmentalProtection Agency in the US and the EnvironmentAgency of England and Wales.

Risk assessments indicate that our products do notappear to pose an appreciable risk for humans orthe environment based on current methods forascertaining safe levels. But we continue to monitorthe latest scientific studies and findings to improveour risk assessments in this area.

We work with other pharmaceutical companies,universities and research groups to develop thescience and methodologies to assess theenvironmental risks of pharmaceuticals in theenvironment and increase understanding of suchrisks. In 2006 we started to investigate the issue ofmixtures of pharmaceuticals, and have establisheda relationship with Brunel University in the UK todevelop research plans in addition to our own in-house programme.

We also engage in joint projects in the pharma-ceutical industry through the PharmaceuticalResearch and Manufacturers of America (PhRMA).In 2006:

• a GSK model was used to upgrade thePharmaceutical Assessment and TransportEvaluation (PhATETM) model so it can be used toestimate the potential environmental impact ofsewage sludge applied to the land. PhATE™ isused to make risk assessments based on specificlocal stream flows and population patterns

• we contributed to developing a database ofscientific literature on the impacts ofpharmaceuticals on aquatic life

• we contributed to an analysis of the impact ofunused medicines on the environment, a reportwhich is being shared with regulatory agenciesand will be developed into a paper forpublication in the scientific literature

We also continue our own work in this area. In 2006we:

• conducted chronic ecotoxicity testing onselected APIs based on new EU guidelines. Wenow use these guidelines as an integral part ofour environmental risk assessment strategy

• continued comprehensive environmental riskassessments for about 40 APIs. We developed‘Allowable Daily Intake’ levels for humanconsumption through drinking water and fishconsumption, as well as ‘No-Effects Levels’ foraquatic organisms. We make quantitative riskassessments by comparing these levels withpredicted environmental concentrations. Wepresented data on selected sets of thesecompounds at scientific meetings

• provided data and risk assessments on morethan 20 GSK APIs to the Swedish Association ofthe Pharmaceutical Industry (LIF) as part of avoluntary programme to provide data tophysicians. GSK is also part of the technicalteam that developed the LIF Guide document‘Guidance for Pharmaceutical Companies’.

See more on our approach to pharmaceuticals inthe environment on our background pages.

http://www.gsk.com/responsibility/cr_issues/ehs_mf_i_pharma_environment.htm



ENERGY EFFICIENCY We need energy to discover, develop, manufactureand distribute medicines. Most of our energy use isin our facilities, especially manufacturing, but alsoR&D and office sites. Global Manufacturing andSupply (GMS) and Research and Development(R&D) accounted for 58 percent and 25 percentrespectively, of our consumption in 2006 and this iswhere we are concentrating efforts to increaseenergy efficiency. Transport is the main source ofour remaining energy use.

Improving energy efficiency will help to reduce ourglobal warming impact. It is now widely acceptedthat the activity of humans is changing our planet’sclimate. There is a scientific consensus that‘greenhouse gases’ (GHGs) such as carbon dioxideand methane are causing the ‘greenhouse effect’ –trapping heat within the earth’s atmosphere,causing a global increase in temperatures. Burningfossil fuels has greatly increased the presence ofthese gases in the atmosphere. Most experts nowagree that this increase in GHGs is causing the earthto warm, a process which could bring aboutdisastrous changes to our climate.

We will continue working to minimise energy useand emissions, despite expected growth in newproducts which will require additional energy. Weexpect to continue finding opportunities for greaterefficiencies in new and existing facilities andoperations. As a result, our new target is to reduceenergy consumption by 1 percent per unit of saleseach year until 2010.

In 2006 we finalised a position paper on our futureuse of energy, following extensive internal andexternal consultation. The position paper sets out astrategy for energy efficiency, renewable energy andemissions trading. It commits GSK to:

• reduce our reliance on fossil fuels whenever itis technically and economically possible

• support effective market-based mechanismssuch as emissions trading, but seek to reduceour own emissions first

• evaluate the use of renewable energy

• evaluate energy investments over their lifetimerather than over the normal payback periodused by GSK

• encourage suppliers, contractors andemployees to improve their energyconsumption

• report transparently our energy consumptionusing internationally recognised protocols

Environmental performanceIn 2006, we continued to improve our use of energy and reduce emissions to the

atmosphere. We used slightly more water than in 2005 and generated more waste butsucceeded in keeping the percentage increase below the percentage rise in sales.

We manufacture pharmaceutical andconsumer products using processes thatinvolve chemicals, so we need to

understand, address and report on environmentalimpacts. They include issues common to allmanufacturers, such as the use of energy and water,and waste handling. In common with some othersectors, we also need to consider potential impactsof certain chemicals which can release volatileorganic compounds (VOCs). Our manufacture ofasthma inhalers also means we use chemicals whichcan damage the ozone layer.

In 2006 we reviewed our reporting to consider themateriality of environmental impacts, in the light ofpharmaceutical industry practice and the GlobalReporting Initiative, as well as inputs fromstakeholders.

Stakeholders have told us they want simplicity inreporting, but they also need an appropriate level ofdetail, and we have tried to balance thesesometimes conflicting requirements. For example,we have reduced and simplified the graphs andcharts in this report, concentrating on areas withtargets. We include a full data table forcompleteness at the back of the environmentsection on page 72.

We concentrate our reporting on:

• issues with potential financial benefit or impactfor GSK such as material efficiency and energyefficiency

• issues directly related to the use of chemicalssuch as volatile organic compounds, chemicaloxygen demand of wastewater and hazardouswaste

This is the seventh year that we have reported onGSK’s environmental performance (and the legacycompanies reported for several years before thecreation of GSK). Copies of these reports areavailable on the Corporate Register.

VerificationThe data in this Environment section and in thehealth and safety pages of the employment sectionof this report are externally verified by SGS UK Ltd.Details can be found in the verification statement onpage 70.

Scope of the dataThe environmental data coversthe calendar year 2006. They arecollected from all of our 80 pharmaceutical and consumermanufacturing sites, 11 of our 13 biologicals sites that are inoperation, 18 of 22 pharma-ceutical and consumer researchand development sites and 6 of 8 major office locations. Weinclude available data for sitesthat were in operation for all orpart of the year. We do notrequire environmental data fromsmall offices and distributioncentres.

Notes attached to the data tableon page 72 explain the scopeand data collection process foreach parameter in more detail.Unless specified as being per unitof sales, figures are absolutenumbers (i.e. total consumptionof energy, water etc.)

http://www.corporateregister.com/

www.uk.sgs.com

http://www.gsk.com/responsibility/cr_issues/ehs_mf_i_energy_climate.htm

http://www.gsk.com/responsibility/Downloads/GSK-energy-management-2006.pdf



Renewable energyWe have started to invest in renewable energyprojects. For example, Barnard Castle has installedtwo wind turbines and other sites are using solarenergy to heat water. Some sites purchased someof their electricity from renewable resources. In thefuture we will report the amount of electricity fromrenewable sources.

Emissions tradingA number of UK sites participate in thegovernment’s emissions trading scheme (ETS),helping us to gain experience in carbon trading. TheUK ETS is a voluntary scheme which rewardscompanies with lower energy taxes if they improveenergy efficiency. Sites that keep emissions below anagreed target can ‘bank’ the spare credits to helpcomply with limits in subsequent years, or they cansell the credits to other participants in the scheme.

In 2006 all GSK sites complied with their ClimateChange Agreements.

The European Union trading scheme came intoforce at the start of 2005 for an initial three-yearperiod. Sites with more than 20 megawatts of

installed combustion capacity are required toparticipate and 16 GSK sites are covered. Onbalance GSK had surplus carbon credits. Anyproceeds from the sale of carbon credits are investedin energy efficiency projects.

Energy investmentsWe have adopted an approach to energyinvestments which reflects the long-term nature ofthe projects and the importance of energy supply tothe business. Instead of applying our normalinvestment criteria we will assess the return on theinvestment over the project’s lifetime.

We expect that this will result in approving energyefficiency and renewable energy projects whichwould not qualify under our normal investmentcriteria.

The first project to be approved was for solar waterheating at our site at Slough, UK.

Target

0 200 400 600 800 1000 1200

Baseline2001

2005

Baseline2006

Target2010

gigajoules per £ million (sales)

Energy consumption

Energy consumption

200120052006

1010.6887.8816.2

Year gjper £ million (sales)

Energy performance In 2006, we used 19 milliongigajoules of energy, approx-imately 1.4 percent less than in2005. We bought 43 percent ofour energy as electricity andgenerated most of the rest fromfossil fuels burned at our sites.

The reduction in energy usecame despite an increase in sales.Energy consumption per £ saleswas 8.1 percent lower than in2005.

We continued to work on energyefficiency initiatives in 2006, withactive energy teams in manufact-uring and R&D and energymanagers at many of the largersites. Examples include:

• installing energy efficientlighting and motion sensors

• thermographic surveys toidentify heat losses, resultingin insulation repairs

• ultrasonic surveys to identifyair leaks

• site voltage reduction projects

• efficiency improvements toheating, ventilation and airconditioning

• retro-fitting economisers tosteam boilers

• steam trap surveys andmaintenance improvements

• electricity and steam meteringimprovements withcentralised monitoring andtargeting software systems

• refrigeration and chillerefficiency improvements

The data table on page 72includes additional details about energy and greenhousegas emissions, such as amounts of electricity purchased and fuelsconsumed, and carbon dioxideequivalent emissions fromenergy sources and from inhalerproduction and use.



TransportWe estimate that transport accounts for 340 millionkilograms of CO2, about 20 percent of our globalwarming impact from energy in 2006.

Business air travel accounts for almost half (44 percent) of our travel-related CO2 emissions. In2006, employees travelled a total of almost 900 million kilometres by plane resulting in 106 million kg of CO2 emissions. Air travel does notinclude group travel originating outside the UK. Ourglobal sales fleet drove a total of over 1 billionkilometres on business travel – resulting in 136 million kg of CO2.

In addition to business travel, we also transportproducts from our manufacturing plants todistributors. In 2006, GSK products weretransported a total of 227 million kilometres – themajority (81 percent) by air freight. We estimate thatthe air freight resulted in 87 million kg of CO2 whileocean and road freight resulted in an additional 11 million kg of CO2.

This year we used the Greenhouse Gas Protocol forall of our calculations of CO2 emissions. We are alsonow able to obtain more details about freightshipments. With these details we can be moreprecise in our calculations of CO2 emissions fromfreight transport. Because of these changes we areunable to compare CO2 emissions from transportwith previous years. We are still working onobtaining the same level of detail from ourpassenger air travel.

We have launched a number of initiatives to reducethe impact of transporting products. They includeconsolidating freight shipments so pharmaceuticaland consumer products are transported together,consolidating shipping points, and making more useof round tripping (managing inbound freight trucksso they do not return empty). We also switch fromair to sea transport where possible.

We have ‘green travel plans’ at a number of sites toencourage employees to reduce the environmentalimpact of their travel to work. For example, at GSKHouse in Brentford, UK, privileged parking spacesare given to car-sharers and drivers of fuel efficientcars, buses powered by biodiesel run to and fromthe local train station, while changing rooms andshowers are provided for cyclists as well as discountsfor bicycle equipment and repairs. We are beginningto use hybrid-engine cars for our chauffeur service.

We encourage employees to use video andteleconferencing where possible to reduce air travel.Virtual meeting software is available to employeesfor making presentations and collaborative working.In 2006, GSK employees conducted over 5,000video meetings, over 464,000 teleconferences andover 5,000 web conferences.



WATER USE GSK uses water in manufacturing (for processes,products, cooling and cleaning) and for general siteuses including drinking, food services and sanitation.Primary supply sites – those that manufacture activepharmaceutical ingredients – are typically heavyusers of water, as are sites that manufacturevaccines or produce drinks. Those involved inresearch and development and commercial activitiestypically use less.

Water is a valuable natural resource that needs tobe conserved – especially in areas where there areshortages – and protected from pollution. The GSKwater standard requires sites to minimise water use,re-use water whenever feasible and ensure that allwastewater is treated and discharged in a way thatminimises adverse environmental impacts.

Our target is to reduce water consumption by 2 percent per annum per £ of sales.

Target

0 300 600 900 1200 1500

Baseline2001

2005

Baseline2006

Target2010

cubic metres per £ million (sales)

Water consumption

Water consumption

200120052006

1310.0999.6946.2

Year m3 per £ million (sales)

Water performanceIn 2006, we used 22 million cubicmetres of water, 1.5 percentmore than in 2005. In spite ofthe small increase in waterconsumption, with the rise insales, water consumption per £ sales was 5.3 percent lowerthan in 2005. Our consumption is about average for the industry,based on benchmarking withother major pharmaceuticalcompanies.

Water usage has gone up mainly due to increased activityat biologicals sites, especiallyhigher vaccines production atBiologicals Belgium. Higherproduction at manufacturingplants in Ireland and the UK also required more water. These increases were partlyoffset by partial closing of onesite and small improvements atseveral sites as a result of waterconservation measures.



WASTEWATERMost sites discharge wastewater to municipaltreatment facilities. Some large sites, especiallyprimary manufacturing, have their own on-sitewastewater treatment systems. Some sites arepermitted to discharge wastewater direct to the sea.

We assess the quality of wastewater by measuringthe chemical oxygen demand (COD) – the oxygenrequired to chemically oxidise compounds in thewater. The lower the COD, the cleaner the water.

Our target from 2006 is to improve COD dischargeby 3 percent a year per £ of sales.

We have changed COD measurement toconcentrate on wastewater from manufacturingprocesses and exclude sites whose waste is mainly

from ‘domestic’ activity (such as washrooms andcanteens). The vast majority of COD comes frommanufacturing and the contribution from theseother activities is not sufficiently significant towarrant the time and effort required to collect thedata. This change may result in a decrease inreported COD of up to 5.7 percent. We haverecalculated prior years’ data so that it iscomparable.

Target

0 300 600 900 1200 1500

Baseline2001

2005

Baseline2006

Target2010

kilograms per £ million (sales)

Chemical oxygen demand of wastewater

Chemical oxygen demand of wastewater

200120052006

1223.7802.5632.8

Year kgper £ million (sales)

Wastewater performanceWe generated 10 million cubicmetres of wastewater in 2006.The total volume was 6.4 percentless than 2005.

This reduction was partly due tochanges at several sites includinga new specialised wastewatertreatment facility at a primarymanufacturing plant whichremoves solvent from thewastewater, closure of somemanufacturing operations inanother plant and other changesto wastewater treatment andproduct mix.

Total chemical oxygen demand(COD) discharged after on-sitetreatment was 15 millionkilograms which was 15 percentless than in 2005. The reductionin COD per £ sales was 21 percent.



WASTEOur research, production and commercial activitiesall produce waste, which we aim to manage safelyand responsibly from when it is generated to its finaldisposal. We want to eliminate waste where wecan, reduce it where we cannot, re-use materials ifpossible, recycle other waste and dispose of anyremaining material sensitively.

We generate different kinds of waste in differentparts of the business:

• production – hazardous wastes such as solventsand other chemicals

• R&D and quality laboratories – small amountsof chemicals including products andintermediates, as well as broken glassware andplastics

• offices – paper and other standard commercialwaste

• renovations take place in production, office andlab space which produce non-routine wastesuch as obsolete equipment, office furnitureand structural materials

Most of the active ingredients in our pharmaceuticalproducts are manufactured using chemicalprocesses. This means that a significant proportionof our waste is classified as hazardous because itcontains solvents and chemicals used in theseprocesses. We classify waste as hazardous, non-hazardous, and non-routine (for waste such asconstruction and demolition rubble).

Most production facilities segregate their wastes,re-use what they can, send what they can forrecycling, and incinerate or landfill anything else.Incineration is usually the preferred choice fordealing with solvents that can’t be reused orrecycled. Where practicable, sites use wastemanagement companies which use incineratorsthat recover energy from burning the materials.

We require disposal contractors to comply with ourEHS requirements and local regulations. Sites audittheir waste contractors or hire consultants to carryout the audits.

We continue to work on reducing waste, especiallyhazardous waste. Improving material efficiency willreduce waste, especially the number and volume ofsolvents. We have set a target to increase materialefficiency of new products going from R&D tomanufacturing to 2 percent.

In the past, some waste and chemicals handlingpractices contaminated land and groundwater.These practices are no longer followed, however weare continuing to clean up these sites to deal withhealth and environmental hazards.

GSK and its heritage companies have spent morethen £100m cleaning up more than 50 sites in theUS over the last 20 years. We are continuing to cleanup 25 of these sites. Most of them are wastedisposal sites where GSK is one of severalresponsible parties. These figures are not includedin the data verification.

Non-hazardous wasteMost non-hazardous waste is general material suchas office waste paper, kitchen waste and non-hazardous substances used in manufacturing. Avery small part is biological waste that has beentreated so it is not hazardous. We do not includeconstruction and demolition rubble and similarmaterial not related to day-to-day operations, whichwe describe separately as non-routine waste.

We continue to look for ways to reduce waste andhave undertaken waste management reviews atmany sites. Our new target is to reduce non-hazardous waste per £ of sales by 1 percent perannum.

Hazardous wasteMore than 93 percent of our hazardous wasteconsists of solvents that are used in productionprocesses. We also dispose of some lubricants andfluorescent lights, while research waste includesanimal carcasses.

Regulations vary widely around the world, but ourfirst choice for solvents is to re-use or recyclematerial. When this is not possible the main disposaloption for solvents is incineration. We aim to recoverenergy from incineration wherever possible.

Most hazardous waste comes from primaryproduction activity, and this is where we concentrateour efforts. We have stopped collecting hazardouswaste data from consumer manufacturing plants,laboratories, offices and most secondary manufac-turing sites. These sites produced about 3 percentof our hazardous waste in the past.

We have not set a target for reduction of hazardouswaste. Our target to improve material efficiency isgeared to accomplish reductions in hazardouswaste.

0 500 1000 1500 2000 2500 3000

Baseline2001

2005

Baseline2006

kilograms per £ million (sales) Target

Hazardous waste disposed

Hazardous waste disposed

200120052006

2850.12917.32871.1


http://www.gsk.com/responsibility/cr_issues/ehs_mf_i_contaminated_land.htm



RecyclingWe recycle hazardous and non-hazardous waste,aiming to minimise environmental impacts as wellas the cost of materials and waste.

The largest waste component is solvent which hasbeen used in the manufacturing process. Somesolvent is purified on our sites and reused in theoriginal manufacturing process. Sometimes we sellthe solvent to commercial reprocessing companies,which we also include in the recycling statistics.Solvent which is not recycled in this way is usuallyincinerated.

Recycling non-hazardous waste such as paper,cardboard, glass, plastic or aluminium, usuallymeans sending it for reprocessing so it can be reusedto make new products.

Two sites in India have stopped land filling their coalash generated on site; instead they sell it as rawmaterial for the production of construction material.

In addition, three nutritional-drink manufacturingsites send some of their process wastes (barley husk)for animal food while others recycle canteen wasteor effluent treatment plant sludge by converting itinto bio-compost.

The data table on page 72 includes additionaldetails about waste such as amounts of hazardousand non-hazardous waste that go to recycling,landfill and incineration and the amount of non-routine waste.

Target

0 500 1000 1500 2000 2500 3000

Baseline2001

2005

Baseline2006

Target2010


Non-hazardous waste disposed

Non-hazardous waste disposed

200120052006

2610.71901.81620.0


Waste performanceIn 2006, we generated 234 million kilograms ofhazardous waste and 114 millionkilograms of non-hazardouswaste.

We recycled 244 millionkilograms of waste (168 millionkilograms of hazardous and 76 million kilograms of non-hazardous). That represents 70 percent of the totalgenerated (excluding non-routine waste.) The proportionof waste recycled was 2 percentlower than in 2005.

We disposed (via landfill orincineration) of 67 millionkilograms of hazardous wasteand 38 million kilograms of non-hazardous waste.

The total hazardous wastedisposed was 5.5 percent higherthan 2005. Adjusted for the risein sales it was 1.6 percent lower.Hazardous waste was mostlysolvents (94 percent), the restbeing general site waste. Weincinerated over 99 percent ofhazardous waste disposed, with energy recovered from 42 percent of this.

Total non-hazardous waste was8.7 percent lower than in 2005.The amount disposed per £ ofsales decreased by 15 percentover the year. Of the non-hazardous waste generated, we sent 19 percent to landfill.



The chart refers to ODS lost from productionactivities and equipment leakage. See data table onpage 72 for information about patient use ofinhalers.

We are installing new equipment which will help usmeet our target of eliminating CFCs fromequipment and product use by 2010, apart fromhalon fixed fire protection systems and equipmentcontaining under one kilogram of CFC.

In 2006, 186 thousand kilograms of CFC propellantwere released when patients used our products. A much smaller amount – 22.8 thousand kilograms– were released during production of inhalers andwe estimate that 645 kilograms CFC 11 equivalentwere emitted from equipment.

OZONE DEPLETION The ozone layer is essential to human survivalbecause it filters out harmful ultra-violet (UV) raysfrom the sun. It has been damaged by ozonedepleting substances (ODSs), mainly chlorofluoro-carbons (CFCs), hydrochlorofluoro-carbons (HCFCs)and halons.

Our main use of ODSs in the past was as thepropellant gas in metered dose inhalers (MDI) forasthma sufferers. The gas is released when patientsuse the inhalers and a small amount escapes duringproduction. In the past we used CFCs but have beenswitching to hydrofluoro-carbons (HFCs) and drypowder technology which does not require apropellant. HFCs do not deplete the ozone layer butdo contribute to global warming.

We also use ODSs in some cooling systems and forother ancillary uses at GSK facilities. We haveswitched to using HFCs, ammonia andhydrocarbons. Ammonia does not contribute toeither ozone depletion or global warming andhydrocarbons have a small global warming impact.

Target

0 2 4 6 8 10

Baseline2001

2005

Baseline2006

Target2010


Ozone depletion potential

Ozone depletion potential

200120052006

9.22.71.0


Ozone depletion performanceTotal ozone depletion potential(ODP) from production ofinhalers and from equipmentwas 23.5 thousand kilograms, 56.5 percent lower than 2005 (based on estimates foremissions from equipment).Ozone depletion potentialestimated from equipment andproduction losses per £ of saleswas 61.8 percent lower than2005.

CFC 11 and CFC 12 are containedin 163 pieces of equipment,amounting to 16,137 kilogramsof CFC. Over 4 thousand items of equipment contain otherozone depleting substances with the ODP of 7,315 kilogramsof CFC 11 equivalent. Weestimate that 2.75 percent or 645 kilograms CFC 11 equivalentwere released from theequipment (using an estimationfactor from the BritishRefrigeration Association).

http://www.gsk.com/responsibility/cr_issues/ehs_mf_i_ozone_depletion.htm



Equipment and productionODSs – mainly HCFCs – are sealed inside coolingsystems and are only released in the event of a leakor during maintenance.

The only way to eliminate emissions is to eliminateCFC and HCFC from cooling systems and that is ournew strategy.

In 2006 we carried out an inventory of all CFC andHCFC containing equipment and will repeat theexercise in the first quarter of 2007 and annually sowe can monitor the decrease in the CFC content. In2007 we will also collect data on HFCs.

We recognise that there is also a risk of catastrophicfailure of equipment and larger releases, until weeliminate these chemicals. We are focusingattention on the larger pieces of equipment toremove them from service before the end of 2010.We do not intend to replace equipment containing1 kilogram or less because these are typicallyhermetically sealed and less likely to leak.

We no longer collect data on losses from equipmentas we are concentrating on eliminating theequipment rather than controlling the releases. Forcomparison to prior years we have estimated that2.75 percent of the total amount of CFC and HCFCis lost from the remaining equipment. The ODPchart shows the emissions from producing inhalersand the estimated emissions from equipment. Lastyear we reported 2985 kg released based on lossesduring equipment failures and replacements.

Metered dose inhalersMetered dose inhalers (MDIs) are commonly usedto deliver the main forms of treatment for asthmasufferers. They are pressurised, hand-held devicesthat use propellants to deliver doses of medicationto patients’ lungs. They were first introduced in the1950s and CFCs were traditionally used as thepropellant because they are non-toxic, non-reactive,non-flammable, and do not have any odour ortaste.

When a patient uses the MDI, the propellant isreleased into the atmosphere. The MontrealProtocol bans the production of CFCs but it exemptsa number of ‘essential uses’ which include MDIs.Nevertheless we plan to eliminate the use of CFCsfrom our worldwide product portfolio by 2010.

We have stopped using CFCs in the US and theEuropean Union. We now offer a selection ofalternatives to ODS-containing inhalers in mostcountries. The main alternative propellant we use isHFC 134a, which does not affect ozone but doeshave high global warming potential, although it isless than CFCs. We have also invested heavily in drypowder delivery systems that do not use CFCs orHFCs.

We will continue to manufacture CFC MDIs in India,China and Pakistan and will use subcontractors toproduce CFC devices for the Bangladesh and LatinAmerica market until 2010. Our target is toeliminate all CFCs by then.

Ozone depletion potential from patient use ofmetered dose inhalers was 32 percent lower thanin 2005. In previous years we only had thisinformation from the US and EU. We now have datafrom India, Pakistan and China and have calculatedthe decrease from all CFC inhalers that we produce.

As production of CFC-containing MDIs decreases,the amount of CFC lost during production alsodeclines. Total ozone depletion potential fromproduction was 55 percent lower than 2005.

http://www.gsk.com/responsibility/cr_issues/ehs_mf_i_ozone_depletion.htm



Target

0 50 100 150 200 250 300 350

Baseline2001

2005

Baseline2006

Target2010


Volatile organic compound emissions


200120052006

321.3231.6180.5


VOLATILE ORGANICCOMPOUNDSWe use volatile organic compounds (VOCs) mainlyas solvents in our primary manufacturing operationsand R&D pilot plants. Solvents are also used to coatsome tablets and in cleaning for sterile operations.We also use small quantities in laboratories but donot measure emissions from this use.

VOCs react with nitrogen oxides in the presence ofsunlight, creating ozone in the lower atmosphere.This results in smog, which is a factor in humanrespiratory illness. Workplace exposure to certainVOCs can also pose a health risk.

In 2006, we released 4.2 million kilograms of VOCsto the atmosphere. This was 16 percent lower thanin 2005. Emissions per £ of sales were 22 percentlower than in 2005.

Our target from 2006 is to reduce VOCs by 2 percent per annum per £ of sales. Improvementsin VOC emissions in 2006 were due to severalprojects at primary manufacturing sites to capturefugitive emissions, changes in production andchanges in the way VOC emissions are calculated inalignment with local regulations.

Photochemical ozone creation potential was 19.8 percent lower than in 2005.

We have changed the way we measure VOCs toexclude the small quantities from laboratories,estimated to be 3 percent of total VOC emissions inprior years. We have recalculated VOC emissions inprior years to make them comparable.

Control of volatile organiccompound emissions at the GSKCork siteVOCs arise from many of theprocesses at Cork, where we use solvents such as dichloro-methane, ethyl acetate andethanol.

The introduction of the UK AirPollution Act in 1987 led to afocus on control and eliminationof solvent emissions and wecarried out a complete review of all points of emission.

All solvent emissions fromreactions, vacuum pumpdischarges, centrifuges, pressurefilters and tanks are collectedthrough a site-wide system andpassed into two high temper-ature incinerators. They operateat 1100ºC and destroy all organicvapours with an efficiencygreater than 99.99 percent.

Emissions from the incineratorstacks are continuouslymonitored for VOC residues,carbon monoxide, sulphuroxides, nitrogen oxides and for hydrogen halides.

This incineration operation isregarded as the best availabletechnology for efficientdestruction of VOCs andprevention of emissions of these substances to atmosphere.

Control of VOC at UlverstonThe manufacture of twointermediate stages in theantibiotic, cefuroxime axetil uses solvents includingdichloromethane (DCM) andtetrahydrofuran (THF).

In 2006, GSK approved a projectto install a carbon adsorptionunit to remove VOCs from theseprocess stages. Carbonadsorption technology wasselected as the methodology toreduce VOC emissions becausethe technology offers a robust,industry standard abatementsolution and represents bestavailable technology.

Existing vents to air will beredirected to the carbonadsorption Unit where they will be adsorbed on an activatedcarbon bed. The system operatescontinuously and uses steamregeneration to removeadsorbed solvents which will berecovered at the site by anexisting solvent recovery unit forre-use in the process.

This project will remove 30 to 40 tonnes per annum of DCMreleases to air and 130 to 150 tonnes per annum of THF.The site will also save anestimated £100k per annumfrom the recovery and re-use of these solvents.



SGS United Kingdom Ltd’s report on Environment, Health and Safety data in theGlaxoSmithKline Environment, Health and Safety (EHS) Report for 2006.

Nature and Scope of the Verification/AssuranceSGS United Kingdom Ltd was commissioned by GlaxoSmithKline to conduct an independentassurance of their 2006 EHS Report. The scope of the assurance, based on the SGS SustainabilityReport Assurance methodology, included 2006 Environment and Health & Safety performance dataand graphs, contained in pages 46 to 49 and 52 to 69 of this report and in the accompanying tableon pages 72 to 74. Data relating to contaminated land pages 65 and health and safety data relatingto non-GSK employees (page 47) were not included in this assurance process. Financial data drawndirectly from independently audited financial accounts has not been checked back to source as partof this assurance process.

The information in the EHS Report of GlaxoSmithKline and its presentation are the responsibility ofthe directors and the management of GlaxoSmithKline. SGS United Kingdom Ltd has not beeninvolved in the preparation of any of the material included in the EHS Report. Our responsibility isto express an opinion on the data, graphs and relevant statements within the scope of verification.

The SGS Group has developed a set of protocols for the Assurance of Sustainability Reports basedon current best practice guidance provided in the Global Reporting Initiative Sustainability ReportingGuidelines (2002) and the AA1000 Assurance Standard (2003). The data in this report has beenassured using our protocol for content veracity. The assurance comprised a combination of interviewswith relevant employees; evaluation of data collection and submission methodologies,documentation and record review and validation with external bodies and/or stakeholders whererelevant. Six sites were visited (in UK, USA, Belgium, Italy and Singapore) and a further eight siteswere contacted by telephone (in UK, USA, Ireland, India and Australia). The sites selected includedthose submitting high proportions of key data and included all parts of the GSK business. Additionallyvisits were made to the Corporate Head Quarters and web-conferencing with key individuals wasutilised in order to complete our verification activities.

Statement of Independence and CompetenceThe SGS Group of companies is the world leader in inspection, testing and verification, operatingin more than 140 countries and providing services including management systems and servicecertification; quality, environmental, social and ethical auditing and training; environmental, socialand sustainability report assurance. SGS United Kingdom Ltd affirm our independence fromGlaxoSmithKline, being free from bias and conflicts of interest with the organisation, its subsidiariesand stakeholders.

The assurance team was assembled based on their knowledge, experience and qualifications forthis assignment, and comprised auditors registered with IRCA, IEMA and EMAS Verifiers.

Verification/Assurance OpinionOn the basis of the methodology described and the verification work performed, we are satisfiedthat the data contained within the GlaxoSmithKline 2006 EHS Report is reliable and provides a fairand balanced representation of GlaxoSmithKline’s EHS activities in 2006.

We believe that GlaxoSmithKline has chosen an appropriate level of assurance for this stage in theirreporting.

Independant verfication/assurance statement

www.sgs.uk.ltd

www.uk.sgs.com



Independant verfication/assurance statement

Key areas for improvement to data collection, submission and manipulation were identified asfollows:

• Definitions for data to be submitted were not always fully understood or adhered to consistentlyat site level;

• Estimations are used to calculate certain data and further guidance could be provided to sitesto ensure that such calculations are approached consistently;

• Establish a more rigorous process to check entered data for anomalies, such as data entered inerror, or missed data;

• Consider incorporation of an internal audit of data and data management systems alongsidecorporate EHS audits;

• Ensure training is undertaken when key individuals are replaced to ensure consistency and fullunderstanding of systems and requirements;

• Ensure that, when sites submit data, comments are included to explain estimations, calculationsand any significant changes;

• Ensure that the process used to extract data from electronic systems is used consistently andappropriately to enable the correct values to be obtained by all individuals utilising the system.

Key areas for improvement in data verification process were identified as follows:

• Ensure that all relevant data is available and internally checked in advance of external verificationprocess.

For and on behalf of SGS United Kingdom Ltd

Pauline EarlBusiness ManagerSystems and Services Certification

27 February 2007



Energy useEnergy for operations

(million gigajoules) 19.0 19.2 18.9 20.0 20.0 20.7Natural gas 9.00 8.66 8.68 9.44 9.71 9.86

Fuels 1.08 1.53 1.53 1.43 1.07 1.42

Coal 0.47 0.63 0.56 0.64 0.95 1.04

Steam imported 0.22 0.19 0.17 0.17 0.06 0.28

Electricity imported 8.19 8.21 7.98 8.31 8.27 8.10

Global Warming Potential (CO2 equivalent)GWP from operations1

energy(million kilograms) 1,666.1 1,692.5 1,665.5 1,749.8 1,734.0 1,824.5Natural gas 453.0 435.9 437.1 475.4 488.6 496.5

Fuels 81.1 114.0 113.0 104.0 76.9 102.0

Coal 22.0 29.3 25.9 29.8 44.1 48.3

Steam imported 15.0 14.3 11.5 11.6 9.4 38.7

Electricity imported 1095.1 1099.5 1078.0 1128.9 1114.5 1138.5

GWP from transport2 (million kilograms) 339.9 233.0 206.0 178.0 180.0 123.0Sales force 136.1 102.0 78.0 70.0 75.0 33.0

Air travel 105.5 112.0 114.0 95.0 92.0 71.0

Product logistics 98.3 19.0 14.0 13.0 13.0 19.0

GWP from other production activities (million kilograms) 400.7 607.8 665.2 723.5 1,082.8 1,385.2

Inhaler production losses 283.4 420.3 491.9 539.1 857.4 1219.0

Equipment containing greater than 1kg refrigerant3 6.99 46.82 46.66 50.20 64.38 58.43

CO2, Methane and Nitrous Oxide 36.29 48.42 54.64 54.90 71.50 57.13

Waste treatment 46.40 76.40 56.86 52.56 44.86 47.06

Other sources 27.32 15.86 15.09 26.76 44.61 3.58

GWP from use of inhalers by patients4 (million kilograms) 4,335 - - - - -

CFC 11 inhalers 197 - - - - -

CFC 12 inhalers 1,083 - - - - -

HFC 134a inhalers 3,055 - - - - -

Water use and dischargeWater (million cubic metres) 22.0 21.6 20.8 23.0 24.2 26.8Municipal 12.73 12.77 12.72 13.03 14.23 15.12

Wells or boreholes 8.95 8.59 7.96 9.88 9.98 11.60

Other Water5 0.302 0.289 0.137 0.072 0.014 0.037

Wastewater volume6

(million cubic metres) 10.2 10.9 11.4 11.5 11.9 13.1WW to recycling 0.58 0.43 0.91 0.42 0.42 0.20

WW to municipal sewer 3.74 3.85 3.86 3.74 3.65 3.76

WW to water bodies 5.88 6.63 6.62 7.35 7.88 9.17

COD after on-site treatment6,7

(million kilograms) 14.7 17.4 18.9 21.6 22.3 25.1COD in recycled water <.01 <.01 <.01 0.90 1.98 <.01

COD to sewer 2.93 3.60 4.45 4.77 4.42 3.91

COD to water bodies 11.77 13.80 14.50 16.01 15.94 21.17

Metric 2006 2005 2004 2003 2002 2001 Global warming potential1. Global warming potential

(GWP) from energysources is calculated as CO2

or CO2 equivalent usingthe Greenhouse Gas (GHG)Protocol developed by theWorld Resources Instituteand the World BusinessCouncil for SustainableDevelopment.

2. GWP from air, land andsea transport is calculatedusing the GHG protocolfrom distance travelled,not directly from fuelused. In years before 2006, we did not collect allcategories of freighttransport or employeebusiness travel. In 2006 we are missinggroup air travel thatoriginated outside of UK.Motor vehicle travelconversion assumesmedium vehicles for salesemployees and heavydiesel vehicles for freighttransport.

3. GWP from refrigerantsreleased from equipmentis calculated using factorsfrom the Kyoto protocol.We have changed fromcollecting data on releasesof refrigerants tocollecting data on theamount of refrigerantcontained in theequipment and calculatingthe releases using a factorfrom British RefrigerationAssociation for probableleakage. We calculatereleases only fromrefrigeration equipmentholding greater than onekilogram refrigerant.

4. GWP from ozonedepleting substances ininhalers uses factors fromthe Kyoto protocol. Wedid not have enoughinformation to calculateGWP from inhaler use inprevious years.

Water5. Water from other sources

includes recycled sources.




Volatile organic compound emissions8

(million kilograms) 4.2 5.0 5.3 6.2 6.4 6.6

POCP from total VOC emissions9 1.29 1.60 1.74 2.11 2.14 2.10

Top five solvents released (million kilograms)

Acetone 1.02 1.15 1.11 1.30 1.46 1.23

Dichloromethane 0.84 0.88 0.95 1.13 1.25 1.72

Methanol 0.44 0.71 0.66 0.92 0.76 0.73

Ethanol 0.42 0.44 0.51 0.32 0.28 0.26

Isopropanol 0.25 0.18 0.23 0.26 0.22 0.35

Ozone depleting substances10

ODS Releases from production (thousand kilograms) 22.8 51.0 59.0 71.5 120.8 183.5

CFC11 releases from production 6.9 14.1 12.6 27.0 52.4 88.5

CFC12 releases from production 15.9 36.9 46.3 44.5 68.3 94.9

ODS Releases from equipment (thousand kilograms) 0.65 2.99 2.66 2.59 6.81 4.32

CFC11 releases from equipment 0.42 1.62 0.93 0.30 2.70 0.56

CFC12 releases from equipment 0.02 0.21 0.31 0.32 0.40 0.33

Other ODS from ancillary equipment 0.20 1.15 1.41 1.97 3.71 3.42

ODS Releases from patient use of inhalers11 (thousand kilograms) 185.6 272.5

CFC11 from patient use 51.85 76.15

CFC12 from patient use 133.72 196.38

ODS contained in equipment12 (thousand kilograms) 23.4

Waste generated and disposed

Hazardous waste generated13,14


Hazardous waste recycled 167.65 190.23 182.19 234.86 255.09 287.5

Hazardous waste disposed 66.68 63.19 69.40 56.13 57.74 58.40

Hazardous waste incinerated with energy recovery15 28.06 28.78 35.47 25.83 27.56 27.76

Hazardous waste incinerated with no energy recovery 38.18 33.41 32.54 28.81 28.06 27.82

Hazardous waste to landfill 0.44 1.00 1.38 1.50 1.93 2.82

Non-hazardous waste generated(million kilograms) 113.7 125.0 149.3 134.6 135.3 132.8

Non-hazardous waste recycled 76.06 83.82 103.99 90.63 85.61 79.34

Non-hazardous waste disposed 37.63 41.19 45.29 43.97 49.66 53.49

Non-hazardous waste incinerated with energy recovery15 8.90 9.18 7.76 8.34 8.43 5.92

Non-hazardous waste incinerated with no energy recovery 7.09 8.28 10.07 6.23 9.40 12.05

Non-hazardous waste to landfill 21.64 23.73 27.45 29.40 31.83 35.52

Metric 2006 2005 2004 2003 2002 2001 Wastewater

6. In 2006 we changed thewastewater calculations to include wastewater andchemical oxygen demandonly from the majorcontributors; primaryoperations, pilot plants, and coating and sterileoperations. We recalculateddata for previous years sothey can be compared.

7. Chemical oxygen demand(COD), a measure of waterpollution, from manufact-uring processes is measuredwhen the wastewater leavesour sites, following any on-site treatment.

Volatile organic compounds8. In 2006 we changed

calculation to include VOC only from the majorcontributors; primaryoperations, pilot plants, and coating and sterileoperations. We recalcul-ated data for previous yearsso they can be compared.

9. In addition to kilograms ofVOC emitted, we calculatephotochemical ozonecreation potential (POCP) in kilograms ethyleneequivalents. Conversion to ethylene equivalents isbased on the EuropeanChemical Industry Council(CEFIC) “Responsible CareHSE Reporting Guidelines”for VOCs (1998).

Ozone depleting substances10. Ozone depletion potential

(ODP) from ozone depletingsubstances is calculatedusing factors from the Kyotoprotocol.

11. In previous years we did nothave information aboutinhalers produced in Asia foremissions from patients’ use.

12. In the previous years we didnot have information on theODS amount contained inequipment.

Waste13. We consider a waste to be

hazardous if it is radioactive,bioengineered orbiohazardous, or it has anyof the properties defined bythe 1989 Basel Convention.This includes flammability,explosivity, water or airreactivity, corrosivity,oxidising potential, acute orchronic toxicity, ecotoxicityor infection. Biologicalwaste rendered non-hazardous after treatment isconsidered a non-hazardouswaste.



Non-routine waste generated16


Non-routine waste recycled 16.86 39.97 6.80 2.59 14.17 16.86

Non-routine waste disposed 18.02 37.54 6.68 23.49 15.66 18.02

Non-routine waste incinerated with energy recovery 2.55 7.46 0.14 0.17 0.03 2.55

Non-routine waste incinerated with no energy recovery 0.66 0.37 0.08 1.88 0.15 0.66

Non-routine waste to landfill 14.81 29.71 6.46 21.45 15.49 14.81

Estimated costs and investments

Operations and maintenance cost (million £) 33.6 39.1 43.0 39.0 47.3 41.4

Capital investment (million £) 9.7 12.1 9.4 11.0 18.5 24.4

Injury and illness – GSK employees17

Hours worked (millions) 194.7 196.6 195.0 201.8 203.7 191.1Fatalities 3 1 2 5 3 5Number of injuries with lost time18 552 547 519 567 638 751Calendar days lost – injuries19 11,281 11,080 12,748 12,344 14,077 16,268Number of illnesses with lost time18 94 77 91 95 116 133Calendar days lost – illnesses19 4386 2518 2959 1377 5342 5304Number of injuries without lost time20 443 437 430 784 955 1079Number of illnesses without lost time20 282 267 354 529 378 315

Injury and illness – non GSK employees (not verified by SGS)Hours worked (millions) 22.8 22.8 20.6 19.8 20.5 17.0Fatalities 0 2 1 4 1 0Number of injuries and illnesses

with lost time 114 100 84 63 71 69Calendar days lost 965 1575 1369 883 1069 754Number of injuries and illnesses

without lost time 373 275 293 199 238 1

Metric 2006 2005 2004 2003 2002 2001 14. In 2006 we changed

calculation to includehazardous waste only from the majorcontributors; primaryoperations, pilot plants,and coating and sterileoperations. Werecalculated data forprevious years so they can be compared.

15. Incineration with energyrecovery means burning the material and using the resulting energy.

16. Non-routine wasteincludes construction anddemolition rubble and isnot included in hazardousor non-hazardous wastecalculation.

Injury & illness17. The health and safety data

cover both our employeesand contract workers whoare directly supervised byGSK employees. We report a snapshot of the injuryand illness performancefor the year. Cases may beadded later but we do notcorrect prior years.

18. Lost time injuries andillnesses are work-relatedinjuries and illnesses that are serious enough toresult in one or more daysaway from work.

19. Lost calendar days are the calendar days thatemployees could not workbecause of work-relatedinjuries and illnesses,including weekends. Thishelps to provide a measureof the severity of injuriesand illnesses.

20. Reportable injuries andillnesses without lost timeare reported incidents thatdid not result in time awayfrom work (lost time).They are more seriousthan first aid but generallyless serious than lost time.



We believe that using some of our profits tobenefit under-served communities is partof being a responsible company. It also

supports our business by:

• demonstrating our commitment to tacklinghealthcare and education challenges

• making our employees feel proud to work forGSK

• improving our reputation with stakeholders

Community investment is not linked to short termbusiness benefits and is not intended to createcommercial markets for GSK.

Donations are made at group level to supportdisease prevention and increase healthcare capacityin developing countries, and by individual GSK sitesto support local communities.

In 2006, our total community investment wasvalued at £302 million ($558 million), equivalent to3.9 percent of pre-tax profits.

Our objective is to ensure that projects aresustainable in the long term and will continue onceour funding comes to an end. Most of ourcommunity investment is made through non-profitorganisations that are experts in the field ofhealthcare and education. This helps ensure ourgiving is targeted effectively at the communities thatneed it most.

VALUE OF COMMUNITYINVESTMENTIn 2006, GSK donations were valued at £302 million($558 million) compared to £380 million ($691million) in 2005. This is equivalent to 3.9 percent ofpre-tax profits compared to 5.6 percent in 2005.

The introduction of a new Medicare prescriptiondrug benefit in the US in 2006 meant fewer patientsrequested help through our Patient AssistancePrograms. As a result we donated medicines worth£200 million ($370 million) to low-income patientsin the US compared to £255 million ($464 million)in 2005. In addition we made £22 million ($41 million) of humanitarian product donations forunder-served communities around the world anddonated albendazole tablets valued at £16 million($29 million) for the lymphatic filariasis eliminationprogramme.

Our work with communitiesWe make donations of money, medicines, time and equipment to support under-servedcommunities around the world. The focus of this investment is on programmes that are

relevant to our business and the skills of our people – improving healthcare andeducation. Full details of our criteria for giving support are available on gsk.com.

Our total community investment also includes £46 million ($86 million) in cash grants and £15 million ($28 million) in management costs.

GSK is a member of the UK’s Percent Club forcompanies which donate at least 1 percent of theirpre-tax profits to charitable causes. In 2006 GSKwas listed sixth in the UK’s Guardian Giving Listwhich listed FTSE 100 companies by the percentageof pre-tax profits contributed to charitable causesduring 2005. For the fifth year in a row we were thebiggest overall giver in the value of our donations.

We belong to the UK’s London BenchmarkingGroup (LBG) and the Committee EncouragingCorporate Philanthropy (CECP) in the US. We reportour donations in line with CECP guidelines whichvalue our medicines at wholesale acquisition cost, aswith other pharmaceutical companies. Wholesaleacquisition cost is the wholesale list price, notincluding discounts.

Breakdown of cash giving (%)

Health 44

Education 38

Environment 2

Art andculture 4

Other 12

Method of giving (£ million)

Cash 46.2

Product 237.4

Inkind 3.0

Managementcosts 15.2

Awards in 2006During 2006, we received:

• A World Business Award from the InternationalChamber of Commerce, the United NationsDevelopment Programme and the Prince of WalesInternational Business LeadersForum for our lymphaticfilariasis eliminationprogramme

• The Excellence in CorporatePhilanthropy Award from the US based CommitteeEncouraging CorporatePhilanthropy (CECP)

• The Frost and Sullivan 2006Global Excellence Award inMalaria Prevention andTreatment

• The Star BusinessCommitment to EducationAward from the PhiladelphiaEducation Fund

• A Global Health Award forLeadership and ScientificExcellence from the New YorkAcademy of Sciences

• A ‘Platinum Ounce’ Awardfrom the Russian pharma-ceutical industry for GSKRussia leadership in Multi-Coloured Lives project



INVESTMENT IN GLOBALPUBLIC HEALTH INITIATIVESThe greatest contribution we can make tohealthcare in developing countries is throughresearch into new treatments and vaccines andpreferential pricing that makes life-saving medicinesmore affordable.

However, we can also help to address barriers toaccess to medicines through our investment incommunity health programmes.

We donate money, medicines and expertise tosupport initiatives to improve healthcare and to raiseawareness about disease prevention in developingcountries.

We focus on five major programmes in thedeveloping world:

• We are a founding member of the GlobalAlliance to eliminate lymphatic filariasis (LF orelephantiasis)

• Positive Action is our programme to reducestigma and improve capacity for HIV and AIDSprevention and treatment

• Our African Malaria Partnership is supportingMobilising for Malaria, an advocacy initiative togenerate political commitment and funding tocombat malaria, in addition to behaviourchange initiatives

• PHASE is our education programme to preventdiarrhoea-related disease through handwashing

• We also donate essential antibiotics and otherproducts in response to humanitarian disastersand to support basic healthcare provision inimpoverished communities

These initiatives are all delivered in partnership withnon-profit organisations, in 2006 we made thefollowing progress.

Eliminating lymphatic filariasis (LF) We are donating our medicine albendazole for the global programme to eliminate LF(www.filariasis.org). LF is a disfiguring diseaseprevalent in tropical countries, which is transmittedby mosquitoes. It can lead to severe swelling of thearms, legs, breasts and genitals and thickening ofthe skin. LF is one of the world’s leading causes ofpermanent disability with more than one billionpeople in 80 countries (over 15 percent of theworld’s population) at risk of infection.

The global programme led by the World HealthOrganization (WHO) and the governments of theendemic countries aims to eliminate LF by 2020 bytreating the one billion people at risk. We havecommitted to donate free of charge as many dosesof albendazole, our anti-parasitic drug used toprevent transmission of LF, as are needed to do this.We expect this to require billions of tablets. A teamof GSK employees helps the Global Alliance in itsadvocacy, research, community mobilisation andeducation initiatives.

In 2006, we donated 155 million albendazoletreatments (2005: 136 million), worth £16 million($29 million) valued at wholesale prices, to 34 countries. We have donated almost 600 milliontreatments since 1998. Two new countries joinedthe programme in 2006.

In 2006, we also gave £1.0 million ($1.9 million) ingrants to support the Global Alliance to Eliminate LF.

Several countries are starting to integrate the LFprogramme with other neglected tropical diseaseprevention initiatives, extending the benefits forpublic health. Zanzibar, for example, is taking anintegrated approach by distributing treatments fortwo other parasitic diseases schistosomiasis(bilharzia) and onchocerciasis (river blindness)alongside LF treatments.

Each country aiming to eliminate LF must treat all at-risk people with two drugs (albendazole anddiethylcarbamazine or Mectizan®) once a year forat least five years. So far, Egypt, several Pacific Islandcountries, Sri Lanka, Zanzibar and Togo havecompleted five annual mass drug administrations.

Now these countries will monitor their populationsand evaluate the impact of the programme on thedisease. In 2006, the Bill and Melinda GatesFoundation donated $11.7 million for operationalresearch to help them do this evaluation. Anassessment conducted in Egypt showed that LF hasbeen eliminated in most areas of the country.

In 2006, GSK and the Global Alliance received aWorld Business Award from the InternationalChamber of Commerce for the LF programme.

(Mectizan is a registered trademark of Merck & Co.)

Future challengesSub-Saharan Africa presents a significant challengeas many countries have yet to commence LFelimination programmes due to lack of funding andhealth infrastructure. Those countries that havestarted LF programmes need additional resourcesto enable them to scale up to reach their full at-riskpopulations. An additional challenge will be theintegration of LF programmes with interventions forother neglected tropical diseases which may involveco-administration of albendazole with othermedicines.

Positive Action on HIV and AIDSOur Positive Action programme, set up in 1992,supports the communities most affected by HIV andAIDS. It aims to strengthen the capacity ofcommunity organisations providing HIV and AIDSprevention, education and healthcare services. A keyarea of focus is to reduce stigma and discrimination(a major barrier to controlling HIV and AIDS) and toincrease the number of people coming forward fortesting and treatment. It recognises that involvingpeople affected by HIV and AIDS is key to controllingthe HIV pandemic.

During 2006 we supported 19 Positive Actionprogrammes running in 17 countries.

www.filariasis.org



Activities in 2006 included:AsiaAsia is at tipping point – research suggests theremay be a catastrophic HIV and AIDS epidemic in theregion if disease prevention and treatment effortsdo not improve. Access to HIV therapies andknowledge about how to use them correctly iscritical to effective treatment. In partnership withthe American Foundation for AIDS Research(amfAR), Positive Action is supporting TREAT Asia,a network of clinics, hospitals, research institutionsand patient support organisations helpingcommunities prepare for new treatmentprogrammes being launched in the region. Thisincludes community projects in China, Cambodia,Thailand and Vietnam and the creation of a regionaladvocacy network.

India has surpassed South Africa as the country withthe most HIV infections in the world. Positive Actionis supporting Freedom from Hunger’s Reach Indiaproject which aims to tackle cultural and socialfactors that expose women in rural India to HIV.Reach India is using self help groups (an establishedand respected means for women to accessinformation and support) to educate women aboutHIV and AIDS. It will reach 500,000 women andtheir three million family members over three years,and train local organisations in delivering educationprojects.

Mexico2006 was the second year of our project with theInternational HIV and AIDS Alliance and ColectivoSol in Mexico, to reduce stigma and discriminationassociated with HIV and AIDS. Thirteen communityorganisations which help people living with HIV andAIDS (including gay men, sex workers and drugusers) have joined the project. Colectivo Sol ishelping them to identify the impact of stigma onHIV transmission and access to services, then workto address this through advocacy with the media,local police and health services and government.

Africa We have committed £1 million ($1.9 million) overthree years to strengthen and integrate HIV andAIDS treatment into general healthcare clinics inKenya. This will enable patients to avoid the stigmaof visiting a dedicated HIV clinic and will helpdoctors to provide ongoing services to peoplediagnosed with HIV. Positive Action is now workingwith 70 clinics (over a third of the sites currentlyoffering ARV treatment in Kenya) to identify themost successful approaches to improving take-upof ARV treatment.

GlobalWe sponsored the Global Village – the communityexhibition and workshop area – at the InternationalAIDS 2006 conference held in Toronto, Canada. Thishighlighted key issues for affected communities andstimulated dialogue and networking among theglobal community. Around 20,000 peopleattended.

We are also supporting a project with theInternational Council of AIDS Service Organizations(ICASO) to boost community-based advocacy which

will scale up national HIV prevention efforts. This isoperating in ten countries, with high HIV prevalence– Ukraine, Russia, China, India, Kenya, Nigeria,Botswana, Rwanda, Belize and Jamaica.

For information on our preferential pricingarrangements for HIV and AIDS medicines, see page22.

GSK’s African Malaria Partnership Our African Malaria Partnership has supportededucation and behaviour change initiatives in eightAfrican countries, through partnerships with NGOssuch as Freedom from Hunger, the African Medicaland Research Foundation (AMREF) and PlanInternational. Since 2003, we have invested £0.9 million ($1.7 million) targeting approximatelytwo million people. We have fostered effectiveprevention and prompt treatment, particularlyamong young children and pregnant women, whoare the most vulnerable to malaria. Our funding forthese initiatives has now come to an end, but oursupport will have a long-term positive impact in thetarget communities.

However the scale of the malaria problem requiresa significantly bigger response. We have given a£0.9 million ($1.7 million) grant, over three years, tosupport Mobilising for Malaria, an advocacyinitiative to generate greater awareness, politicalcommitment and sustained funding to combat thedisease. In 2006, national Coalitions Against Malariawere launched in the UK, Belgium, France, Ethiopiaand Cameroon bringing together advocates andactivists from the public sector, NGOs, the media,the private sector and the political, academic andscientific communities.

GSK won the Frost and Sullivan 2006 GlobalExcellence Award in Malaria Prevention andTreatment. The judges noted that GSK ‘has madefacing the challenge of malaria a key corporateresponsibility issue, using its core business skills andresources, as well as philanthropic communityprograms, to contribute to global efforts to tacklethis disease’.

Personal Hygiene And SanitationEducation (PHASE) Every year more than two million people die ofdiarrhoea-related disease, mostly children indeveloping countries. These deaths can often beeasily prevented through better hand washing andsanitation.

PHASE is helping to reduce diarrhoea-relateddisease by encouraging school children to washtheir hands. We established PHASE in 1998 andsince then we have invested over £1.7 million ($ 3.1 million) into the programme.

PHASE is run in partnership with AMREF, PlanInternational and Save the Children – as well asMinistries of Health and Education in each of thecountries.



The programme has had impressive results. Forexample, evaluation data from a sample of PHASEschools in Nicaragua over a four year period showthat the frequency of hand washing after using thetoilet among pupils in participating schoolsincreased five-fold, and the proportion of childrenreporting diarrhoea in a two week period fell fromover 40 percent to just 13 percent.

In Bangladesh, which joined in 2005, PHASE hasbeen implemented in 64 schools reaching 38,000children so far. It has been integrated into the SchoolHealth and Nutrition Programme of Save theChildren (our PHASE partner in Bangladesh).

PHASE was extended to Mexico and Tajikistanduring 2006 and now operates in eight countries.The total number of children reached by PHASE isnow estimated to be 375,000.

Future challengesWe plan to launch PHASE in Kibera, Kenya – Africa’slargest slum. This will be the first time PHASE hasoperated in an informal settlement, creating amodel for improving children’s health in one of thehardest urban communities.

Humanitarian reliefGSK donates essential products, such as antibiotics,to help relief efforts in disaster areas and supportbasic healthcare provision in impoverishedcommunities.

Donations are made at the request of governmentsand major charitable organisations and may bemanufactured specifically for these partners. Thisenables charities to hold a range of medicines instock so they can respond promptly in anemergency. We work in partnership with severalrelief charities including AmeriCares, Direct Relief,InterChurch Medical Assistance, MAP Internationaland Project HOPE.

Activity during 2006During 2006 we donated life-saving medicinesworth £22 million ($41 million) valued at wholesaleprices, to support relief efforts and communityhealthcare in 99 countries.

Requests for our medicines are sometimes made tohelp people affected by conflict. This can becontroversial and requires careful management. Weseek to ensure equitable treatment in our approach,directing our commitment to support health needsand the provision of long term support, and to workwith our partners to get essential drugs to doctors,patients, clinics and hospitals.

For example, in 2006 we made four shipments ofour medicines to support people displaced by theconflict in Lebanon. This was in response to specificrequests by our humanitarian aid partners. Weprovided supplies of Augmentin, Amoxil, Zinacef,Zantac and Lanoxin valued at over £216,000($400,000), with the products being handled by ourpartners, AmeriCares, IMA and Direct Relief.

OUR INVESTMENT INTOLOCAL PROGRAMMESWe support a wide range of health and educationinitiatives in the communities where we operate.Donations are made centrally and by our sites inresponse to local needs.

Below are just a few examples of the manycommunity partnerships we supported in our majorregions in 2006:

Supporting HealthEuropeIn addition to our long-term support for the ‘Holein the Wall’ children’s camps in Barretstown, Irelandand L’Envol, France we are giving £300,000($555,000) each to programmes in five Europeancountries to improve children’s healthcare.

The other major country programmes are:

• Italy – Reading for Growing, a reading aloudprogramme for children with neuro-functionaldisabilities

• Romania – Beacon of Hope, a palliative careprogramme for children

• Slovakia – Change in Advance, a diseaseprevention programme for children on urbanhousing estates

• Spain – Children’s Shelters, providing healthcarefor homeless and abandoned children

• Russia – Multi-Coloured Lives. See sidebar.

InternationalWe support major public health initiatives to tackleHIV and AIDS, lymphatic filariasis, malaria anddiarrhoea-related diseases in developing countries.

In addition we are funding country-specificprogrammes, each with a grant of £200,000($370,000), over three years.

Our other country programmes in our internationalregion include:

• Brazil – Attituda Positiva, uses drama in schoolsto educate teenagers about HIV and goodreproductive health

• Philippines – Pinoy Health Pass, Family Healthand Well Being that provides health educationfor families on low incomes

UKIn 2006 GSK supported over 100 charitableorganisations in the UK. This included over£580,000 ($1.1 million) to support medical researchby Asthma UK, the British Retinitis PigmentosaSociety, Deafness Research UK and the MuscularDystrophy Campaign.

Our approach to donationsmedicinesGSK follows the World HealthOrganization InteragencyGuidelines for Drug Donations.These state that donationsshould be:

• made in response to anexpressed need

• sent with prior consent

• labelled correctly

• have a minimum one-yearshelf life

We do not donate medicines for diseases which require acontinuous, assured supply.

We are an active member of thePartnership for Quality MedicalDonations (PQMD), an allianceof pharmaceutical companiesand charities that encouragesbest practice in the donation and delivery of medicines.

Multi-Coloured Lives in Russia We support Multi-Coloured Livesto help improve the quality oflife of disabled children in Russia.The programme brings togetherthe Regional Charity CommunityFoundation, the Government ofMoscow and GSK Russia. Sixthousand children aged 9 to 12 years old with limited healthcapabilities are taking part.

Multi-Coloured Lives is usingcommunity-based communi-cations such as TV, magazines,workshops, schools liaison andexhibitions to educate andgradually change individuals‘perceptions of disabled people.

GSK Russia received a ‘PlatinumOunce’ Award for its leadershipin Multi-Coloured Lives from theRussian pharmaceutical industry.



Other donations to support health charitiesincluded: • The Princess Royal Trust for Carers ‘Out of

Hospital’ initiative – a donation of £209,000($387,000) over 3 years to develop guidelinesand support for GPs and hospitals working withcarers

• Myasthenia Gravis Association – a donation of£524,000 ($969,000) over three years toprovide specialist nurses for people sufferingfrom Myasthenia Gravis, a chronic auto-immune neuromuscular disorder

• The Down’s Syndrome Association ‘ShiftingPerspectives’ – £100,000 ($185,000) to supporta photographic exhibition showing that peoplewith Down’s Syndrome can lead full, rewardingand semi-independent lives

Our IMPACT Awards recognise communityorganisations whose work has significantlyimproved health. Each year we award £275,000($509,000) to a range of healthcare charities,selected by a panel of judges. In 2006 HartlepoolFamilies First was judged the overall winner for itswork in bringing health services to deprived areas ofHartlepool in a refitted double-decker bus.

USWe are increasing our support for the Zone HealthSchool Obesity programme run by the NorthCarolina Prevention Partners, following a pilotprogramme that successfully reached 8,000children.

The programme provides elementary, middle andhigh schools in North Carolina and Philadelphia witha learning model to encourage healthy weightthrough nutrition, education and exercise. A newcomponent of the programme will include distancelearning.

The other programmes we support in the USinclude:

• The Children’s Health Fund’s ReferralManagement Initiative (RMI) which helps high-risk and homeless children receive the specialistmedical care they need

• We recognise excellence in communityhealthcare in the Philadelphia area through ourUS GlaxoSmithKline IMPACT Awards. Each yearup to ten non-profit organisations receive£22,000 ($40,000) each to help them continuetheir work

FoundationsGSK does not operate a single charitable foundationfor its community investment programmes, but hascountry-based foundations in Canada, CzechRepublic, France, Italy, Romania, Spain and NorthCarolina in the US. Our local foundations support awide range of charities and healthcare initiatives.

Since 1998 the GSK France Foundation hassupported 77 programmes in 13 countries. Thesefocus on people living with HIV and AIDS indeveloping countries and aim to improve healthcarethrough prevention, education and training. During2006, 23 new programmes were implemented insix countries with grants of £469,000 ($868,000).

The GSK Foundation Canada focuses on hospicecare, helping terminally ill patients and their families.The Foundation also supports communityprogrammes in Africa, including AIDS OrphansUganda, a three-year programme buildingcommunity support for vulnerable children in theLuweero District, working with African MedicalResearch Foundation (AMREF).

The North Carolina GSK Foundation in the USA isan endowed, self-funding organisation. It supportsinitiatives in the areas of mathematics, science andhealth education in North Carolina. In 2006, thisFoundation awarded grants totalling £1.4 million($2.5 million).

SUPPORTING EDUCATIONGSK supports education in the UK and US with aparticular emphasis on making science morerelevant to young people and supportingprofessional development for science teachers.

Our education programmes help to increase thepool of potential future employees by encouragingyoung people to pursue science careers.

Science education in the UKPuppets: Talking Science•Engaging Science is a newinitiative launched in 2006 and sponsored by GSK,which uses puppets to increase children’sunderstanding of science.

Research by the Nuffield Foundation found thatwhen teachers used puppets in science lessons thechildren treated them as if they were real characters.The puppets engaged the pupils in helping them tosolve science problems. As a result the childrentalked more about science which increased theirunderstanding of the subject. This was particularlynoticeable among low achieving children and thosewho did not normally speak in lessons. Typicalremarks included ‘It’s like talking to a group offriends not a teacher’ and ‘I understand much betterwith the puppets’.

We have invested over £480,000 ($888,000) totrain 9,000 teachers in 4,500 UK primary schools touse the puppets effectively in science lessons.Schools will also receive a book of science basedstories, an animated CD and two hand heldpuppets. In each story the two puppets are facedwith a problem with a science theme, and ask thechildren to help them solve it.

Vietnam midwives Since 2004, we have beensupporting a unique trainingprogramme based in Tu DuHospital, Ho Chi Minh City,Vietnam. The project is training500 birth attendants to providematernal healthcare services inrural villages. The project aims toreduce childbirth complicationsand decrease newborn fatalityfrom the unacceptably high levelof 6 percent.

Supported by Tu Du medical andnursing staff, and housed withina residential training centre builtby GSK, the trainees spend fourmonths gaining practicalknowledge of maternal andchild healthcare. Over 350midwives have now graduatedwith a government-recognisedqualification. Each midwife hasbeen equipped with a medicalpack and some are providedwith a motor scooter to assistaccess to remote areas.

Crisis Open ChristmasCrisis Open Christmas offersmuch needed support for 1,500homeless people across Londonduring the festive season. In2006, we supported Crisis in thefollowing ways:

• Donations of food andclothing from GSK employees

• A donation to the Christmascard challenge campaign,instead of sending corporateChristmas cards

• A donation of £24,000 tocover the operating costs oftheir mobile medical servicethat visits the Crisis centres



In 2006 we announced funding for the CREST �Investigators education project. This programme willbe run in partnership with the British Associationfor the Advancement of Science to provide scienceactivities and awards for after school clubs inprimary schools. By 2010, we aim for 5,000 schoolsand 55,000 children to be taking part.

Our support for INSPIRE (INnovative Scheme forPost-doctoral researchers In Research andEducation), enables post-doctoral researchers tospend half their time in specialist science schoolsand to gain a Post-Graduate Certificate in Education(PGCE).

Education in the USWe are a founding partner of the Institute for aCompetitive Workforce, a business coalition run bythe US Chamber of Commerce to improveeducational standards through partnershipsbetween business and education providers.

We are working with the National Board ofProfessional Teaching Standards (NBPTS) byproviding scholarships and an endowment of£541,000 ($1.0 million) to increase the number ofscience teachers who are National Board Certified.So far we have focussed on North Carolina and Philadelphia but will now be expanded to all50 states.

We support a range of local education initiatives inthe US to help engage young students in science.Examples include:

• Science in the Summer, a freeprogramme in Philadelphia, givingchildren the chance to participate inhands-on experiments and sciencecourses

• We have been a major sponsor of the Universityof North Carolina’s travelling science laboratory,Destiny, since its inception in 1999. Destinyserves approximately 100 under-servedsecondary schools and reaches 4,000 studentsper year

EMPLOYEE INVOLVEMENTWe encourage employees to contribute to theirlocal communities as volunteers. This benefits thecommunity and our employees who gain newexperiences and skills.

Hundreds of employees give their time to goodcauses through our Days of Caring in the US, andto support school science education through ourUK Science and Engineering Ambassador Schemeand US Partnership for Educational Discovery.

In the UK and US we make cash donations tocharities where employees have done voluntarywork. In 2006:

• The GSK Investment in Volunteer Excellence(GIVE) programme gave £183,000 ($339,000)to 365 charities in the US where employees ortheir partners volunteered at least 50 hours

• Our Making a Difference programme provided grants of £225,000 ($416,000) toover 380 charities where employeesvolunteered

In many countries we encourage employees todonate money to charity by matching the moneythey give or by providing tax-efficient ways for themto make a donation, in accordance with localtaxation guidelines.

In 2006 in the US, GSK matched donations by employees and retirees at a value of £2.7 million ($5 million). In addition, GSK gave £703,000 ($1.3 million) to match donations by GSKemployees through the annual GSK and UnitedWay campaign.



Data summary2002 2003 2004 2005 2006

Access to medicinesNumber of countries supplied with preferentially priced ARVs1 50 56 57 56 51Number of preferentially priced Combivir and Epivir tablets shipped (millions)1 7.9 15.9 67.1 126.3 86.3Number of generic ARVs supplied by GSK licencees (millions) – – – – 120GSK Combivir not-for-profit price ($ per day)2 1.7 0.65 0.65 0.65Voluntary licences granted to generic manufacturers for GSK ARVs (cumulative total) 6 7 8Value of products donated through GSK Patient Assistance Program in the US (£ millions) 112 125 203 255 200

Research and developmentExpenditure on R&D (£ billions) 2.9 2.8 2.9 3.1 3.5GSK animal research facilities accredited by the Association for Assessment 7 7 10 10 103

and Accreditation of Laboratory Animal CareNumber of trials published on the GSK Clinical Trial Register (cumulative total) – – 143 2,125 2,7604

Ethical conductNumber of managers completing certification to the GSK Code of Conduct 700 9,000 9,600 >12,000 >12,000Number of contacts through our ethics compliance channels5 2,580 3,644 5,363

EmploymentWomen in management grades (%) 32 34 35 35 36Ethnic diversity – minorities (US, %) 19 19.5 19.5 19.6 19.8Ethnic diversity – ethnic minorities (UK, %) – – 15.5 16.8 18.3Lost time injury and illness rate (cases per 100,000 hours worked) 0.34 0.30 0.30 0.30 0.33

EnvironmentNumber of contract manufacturers audited 16 28 35 41 36Energy consumption (million gigajoules) 20 20 19 19 19Water consumption (million cubic metres) 24 23 21 21 22Ozone depletion potential from metered dose inhalers (tonnes CFC-11 equivalent)6 1,500 782 464 273 186Ozone depletion potential from production (tonnes CFC-11 equivalent) 121 72 59 51 23Ozone depletion potential from refrigeration and other ancillary uses 7 3 3 3 1(tonnes CFC-11 equivalent)Volatile organic compound emissions (thousand tonnes)7 6 6 5 5 4Global warming potential from energy sources (thousand tonnes CO2 equivalent)7 1,734 1,750 1,666 1,693 1,666Hazardous waste disposed (thousand tonnes)7 58 56 69 63 67

Community investmentTotal community investment expenditure (£ millions) 239 338 328 380 302Value of humanitarian product donations, including albendazole (£ millions) 24 116 57 41 38Number of albendazole tablets donated for prevention of lymphatic filariasis (millions) 66 94 67 136 155

1. Includes ARVs sold at not-for-profit and discounted prices. We are unable to collect data for the number of patients treated. 2. Includes delivery costs. The Médecins Sans Frontières pricing report lists the average cost of generic equivalents. 3. This covers 91% of animals used in GSK facilities. In 2005 we had 14 animal research laboratories. In 2006 we closed a laboratory in Japan, aquired laboratories in

Croatia and Canada, and established contracts to use laboratories in Singapore and the US, making a current total of 17 GSK laboratories where we use animals.4. 98% of trials completed since the merger which created GSK. 5. Includes contacts with line managers, compliance officers, our confidential Integrity Helplines or offsite post office box (in the US). 6. 2002 to 2004 data do not include inhalers made in Asia.7. We have changed the way we calculate these data and the previous years’ data reflect this change. See full environmental report for details.

TrademarksBrand names appearing in italics throughout this publication are trademarks either owned by and/or licensed to GSK or associated companies.

GlaxoSmithKline - CR Report 2006 - GSK · Introduction Welcome to GlaxoSmithKline’s Corporate Responsibility Report 2006. This report explains ... • Nutritional drinks – Horlicks,

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